How to Cope with Financial Setbacks
Reset your budget., Cut expenses., Work together., Plan for the future., Get some help.
Step-by-Step Guide
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Step 1: Reset your budget.
Whether you take a hit to your personal or business finances, you will need to reevaluate your current budget.
Whether you have to pay for an unforeseen expense or budget for a decrease in income, you will need to look at your finances and determine where to make changes.
Calculate what your budget will be with the setback and compare it to your current financial plan.For example, if you are laid off, you will need to look at your savings, severance package, or unemployment benefits in order to develop your budget while you look for a new job.
As a business owner, you may need to calculate how to continue operating your business on a shrinking revenue stream. -
Step 2: Cut expenses.
With any financial setback, you will need to rein in your spending.
Because money will be tight, you will not be able to spend money in the same way that you did before the setback.
Look at your budget and determine what things can be cut and what is essential.For example, if you are a business owner, you might cut back on discretionary spending until your business bounces back.
With personal finances, you might cut back on eating out and non-essential purchases until you are back in the black. , Whether as a family or a business, you will need to come together with those around your to get through any setbacks.
You will need to work together to budget and cut costs.
You will need to ensure that everyone is on the same page and aware of what needs to be done in order to pull through the financial crisis.
You should have a family or business meeting to outline a plan of cutting costs and saving money.
For example, as a family, you get your kids involved with cutting costs by having them do more chores around the house instead of hiring extra help.
As a business, you might brainstorm ways to scale back on expenses without cutting into your cash flow. , Develop a plan to minimize your or your business’ chances for financial difficulties in the future.
Although you cannot eliminate the possibility of setbacks, you can mitigate their impact.
Consider saving some money in a “rainy day” fund designed to help you get through financial setbacks.
You should also invest in insurance to cover the expenses of catastrophic losses.For your personal finances, you should save up at least six months’ worth of living expenses.
For example, if your living expenses total $2,200 a month, you should save $13,200 for emergencies. , If you are having a hard time dealing with your setback, you should consider getting some professional help.
An accountant or financial planner may be able to help you get your finances back on track.
They will work with you to develop a budget and plan for the future.You can find specialists and experts via the Financial Planning Association and the National Association of Personal Financial Advisors.
Be sure to look for someone who works for a Housing and Urban Development-certified agency. -
Step 3: Work together.
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Step 4: Plan for the future.
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Step 5: Get some help.
Detailed Guide
Whether you take a hit to your personal or business finances, you will need to reevaluate your current budget.
Whether you have to pay for an unforeseen expense or budget for a decrease in income, you will need to look at your finances and determine where to make changes.
Calculate what your budget will be with the setback and compare it to your current financial plan.For example, if you are laid off, you will need to look at your savings, severance package, or unemployment benefits in order to develop your budget while you look for a new job.
As a business owner, you may need to calculate how to continue operating your business on a shrinking revenue stream.
With any financial setback, you will need to rein in your spending.
Because money will be tight, you will not be able to spend money in the same way that you did before the setback.
Look at your budget and determine what things can be cut and what is essential.For example, if you are a business owner, you might cut back on discretionary spending until your business bounces back.
With personal finances, you might cut back on eating out and non-essential purchases until you are back in the black. , Whether as a family or a business, you will need to come together with those around your to get through any setbacks.
You will need to work together to budget and cut costs.
You will need to ensure that everyone is on the same page and aware of what needs to be done in order to pull through the financial crisis.
You should have a family or business meeting to outline a plan of cutting costs and saving money.
For example, as a family, you get your kids involved with cutting costs by having them do more chores around the house instead of hiring extra help.
As a business, you might brainstorm ways to scale back on expenses without cutting into your cash flow. , Develop a plan to minimize your or your business’ chances for financial difficulties in the future.
Although you cannot eliminate the possibility of setbacks, you can mitigate their impact.
Consider saving some money in a “rainy day” fund designed to help you get through financial setbacks.
You should also invest in insurance to cover the expenses of catastrophic losses.For your personal finances, you should save up at least six months’ worth of living expenses.
For example, if your living expenses total $2,200 a month, you should save $13,200 for emergencies. , If you are having a hard time dealing with your setback, you should consider getting some professional help.
An accountant or financial planner may be able to help you get your finances back on track.
They will work with you to develop a budget and plan for the future.You can find specialists and experts via the Financial Planning Association and the National Association of Personal Financial Advisors.
Be sure to look for someone who works for a Housing and Urban Development-certified agency.
About the Author
Samantha Foster
Committed to making cooking accessible and understandable for everyone.
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