Is it really possible to turn a financial tragedy around? Maybe you can’t eliminate it. But can you ensure that its effects will be temporary?
Yes, that’s possible. Even the 69% of Americans who said that their economic situation got worse during the pandemic and recession of 2020 can recover from this. It will be very hard and a long recovery is to be expected. But all is not lost.
Of course, it would require effort on your part to ensure that the current crisis you are going through will not completely destroy your finances. The earlier you act to reverse the effects, the less you have to recover. Once you recover, you can start working on strengthening your personal finances. That way, you can be in a more secure financial position. You’ll be in a better position to survive the next financial tragedy that will come your way.
How to manage a financial tragedy
The question is, how can you ensure that this current financial crisis that you’re going through will not leave a permanent effect on your finances? After all, trying to have a good financial position is challenging already. Trying to manage your finances while you are in the midst of a difficult situation will make things harder. It can be done, but you have to commit to it. The key is to make your finances stronger.
What can you do to make this possible?
Practice frugal spending
Since you are in the midst of a financial tragedy, this is a must. You have to learn how to prioritize your spending so you can focus only on what is important. That’s what frugality is all about. It’s not about restricting your lifestyle. Instead, it’s allowing you to support the life that you want despite your limited resources.
What’s great about being frugal is it trains you to be better at spending your money. You’ll scrutinize your expenses and you’ll make sure that it aligns with your priority expenses. This is a great habit to develop. It’ll really help you become a smarter consumer.
Manage your bills closely
To help manage your financial tragedy, you should also learn how to manage your bills properly. Keep a close eye on all your bills and scrutinize which of these you really need – and which of these you can go without.
Sometimes, there are bills and expenses that we keep on paying for that we don’t really need anymore. We may have needed them before. But changes in our lives rendered them unnecessary already. Now that you are in the midst of a tragedy, you have to get rid of the bills if they’re not useful anymore. Anything you can save will help make your finances more secure.
Continue paying down your debt
If you have debts, you should continue to pay it off. If your finances are compromised because of the tragedy you are currently in, you might not feel like prioritizing your debt payments. You’ll want to conserve your finances and focus on the expenses that will help you survive. This means paying for food, groceries, and also your bills. This also includes any expense that you need to meet to get yourself out of the tragedy you’re currently in.
But surviving the tragedy is not your only task. You have to make sure that you can make your finances stronger. Part of that is to ensure that anything that can weaken your finances will have to be dealt with. That includes your debts. That means you should find a way to continue paying off your debts.
Avoid accumulating more debt
Finally, you can keep your financial tragedy from getting even worse if you keep your debts down. It’s not enough that you pay off your existing debt. You have to make sure that you won’t add more to your balance.
The thing is, this could be harder to do. That’s because people usually resort to borrowing money when they are in a crisis. They use their credit cards to pay for necessities. While that can help you meet current needs, it will cost you in terms of high-interest rates. If you can’t pay your balance in full, your balance will grow because of the finance charges. Since you are in a financial tragedy, there’s a high chance that this will happen.
If you really need money, you might want to consider other options. Like during the coronavirus pandemic, 14% of Americans have borrowed from family and friends just to keep themselves from falling behind on bill payments. This is probably better than using your credit card. Depending on who you’ll borrow money from, there’s a possibility that they won’t charge interest on your loan.
The bottom line is, find a way to avoid more debt so you won’t make things worse for your finances.
Why you should deal with your financial tragedy wisely
You might be thinking: why is it important to deal with this now? Can’t I take a breather since this financial tragedy is so hard to overcome?
You do have a choice to postpone working on your finance. But you have to realize that it won’t make things easier for you in the future. The longer it takes for you to work on the damages to your finances, the harder it will be for you to recover.
If you need motivation, here are the different reasons why you should deal with this financial tragedy wisely.
To care for your financial health
If you don’t want to ruin your financial health, you have to make keep any crisis from doing any damage. The health of your finances will allow you to survive the one that you’re going through right now. It will also ensure that if you go through another crisis in the future, you have a better chance of getting through it unscathed. So if protecting your financial health right now will make that happen, then it’s worth the effort.
To lessen your recovery period
Another reason to be smart while going through a financial tragedy is to minimize the recovery period you have to go through. Wouldn’t you like to immediately continue with how you lived your life before the crisis happened?
That doesn’t mean you have to spend recklessly. But you can enjoy the freedom to spend without feeling guilty. If you keep the damages on your finances from being too great, then you can back to living your preferred lifestyle as if nothing happened.