We all lose money. Whether it was that stock we thought would go through the roof, or perhaps that deal fell through. Every single one of us has lost money in our lives. But what do you do when you lose a part of your income, and you need to find a way to make up the difference?
Most of us panic, and make some bad decisions because financial loss is never easy. It can seem like months of lost income will make your situation worse, but it’s not the case. I’ll guide you through the steps needed to help you cope with financial loss.
1. Lean On Those You Trust
It’s natural to want to talk about what happened with someone you trust. If you have a close friend or family member who has been through something similar, ask if they can share how they coped with the situation. If no one comes to mind, find a therapist who specializes in trauma and loss counseling.
2. Do Not Take Any Impulsive Action
You may feel like you have to do something immediately, but doing so can negatively affect your financial situation. Try to take time to think about what happened and how it will affect your finances before making any major changes. Do not take any impulsive action because waiting a day or two will give you time to assess your options and make a plan of action.
3. Assess the Situation Impartially
It’s important to take a step back from the situation and assess it impartially. As you do so, try not to let your emotions cloud your judgment or make you feel like a failure.
Start by asking yourself these questions:
What happened? When did it happen? What were the circumstances? How much money was lost, and what was it used for?
Once you’ve answered these questions, write down your thoughts in detail. This will help you organize them and put them in perspective.
Next, consider how this loss will affect your overall financial situation and how much more money you’ll need to make up for it. You may be able to transfer some funds from other accounts into this one if necessary, but be careful not to overextend yourself. If possible, consider reducing other spending categories so that you don’t have to dip into savings or take out a loan just yet.
Finally, look at your budget and see if there are areas where you can cut back on spending temporarily until you’ve recouped the missing funds.
Related: The Best Budgeting Apps for your needs
4. Reduce Your Expenses Till You Get Back on Track
Getting back into a normal lifestyle after a financial loss will be difficult. The best way to deal with this situation is to get started as soon as possible. In these cases, it’s important to start by reducing extra costs like entertainment and restaurant food bills, which can be used as a guide for other potential cuts. Reduce your expenses, then increase them slowly until you are back on track.
5. Increase Sources of Income
If your financial situation has been affected by a loss, there are several things you can do to increase your income. Take advantage of any bonuses or raises that may come your way, or consider a second job or part-time job if necessary.
You can also look into other ways to make extra money, such as selling items on eBay or renting out rooms in your home. Once these options are exhausted, look at other ways to bring in extra money — perhaps through blogging or freelance writing projects — as well as ways to cut expenses so that you won’t need as much money coming in each month.
6. Take a Private Loan
Taking out a private financial loan is another way of coping with the loss.
A private loan will help you cover some of your expenses and give you time to figure out how to get back on track. It’s also important to note that most lenders offer flexible repayment schedules, so it’s not uncommon for them to adjust interest rates based on your ability to pay back the principal amount in time.
They also don’t require any collateral, which is an added bonus for people who have trouble getting approved for other types of loans because they don’t want to use their home or car as collateral.
7. Build Your Reserves
The next step is to build up an emergency fund. This should be at least three months’ worth of living expenses, but it can be as much as six months if necessary. The goal here is not to create a buffer against the unexpected, but instead to focus on being able to handle any emergency without relying on credit cards or borrowing from friends or family members.
8. Learn From Your Mistakes & Take Steps to Avoid Experiencing Similar Losses In The Future
As you go through life and experience losses, it’s important to learn from your mistakes and take steps to avoid similar losses in the future.
The first step is to evaluate what happened. What exactly did you lose? How much did it cost? How much did it impact your life?
Analyzing these questions will help give you an idea of what caused the loss, which can help you determine whether or not there was any way to prevent it from happening or if there were any steps that could have prevented it.
In addition, if this is your first time experiencing a financial loss like this, do not be afraid to ask for help. It’s okay to ask questions or seek advice from others who have experienced similar losses before. This can help provide valuable insight into how best to move forward with your finances going forward.
Final Thoughts
Life presents us with all kinds of challenges, big and small. No one can ever predict what these experiences will bring, and I don’t want to pretend that I can offer any kind of panacea for such a diverse group as those who read this blog.
Still, one thing remains the same: you must first acknowledge your loss. There’s no way around it—you have lost something, and there’s nothing you can do to get it back. That doesn’t mean that there’s no hope, though. It simply means that you must reassess where you are and what you’re working with now in order to make your life better in the future.
Author Bio: Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds.
Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking, and going on adventurous trips.
Nice article