No matter how much money you make, we all strive for some level of financial stability. When things are going well, it’s easy to take this stability for granted. When you can comfortably cover your expenses, make significant contributions to your long term investments, and still have money left over for non-essentials, it can be hard to imagine what it’s like on the other side.
Unfortunately, things can happen that are out of your control. Whether it’s losing your job or a surprise medical expense, many people will go through tough financial times at some point. This can be a painful experience and one that could be detrimental to your mental health. However, there are ways you can make this situation easier on yourself.
Here are eight tips for staying positive (and sane) while going through a financial setback.
8. Know That You’re Not Alone
It’s common for someone going through a financial setback to feel embarrassed or ashamed. As much as we may hate to admit it, money is closely tied up in our self-worth. If you suddenly find yourself in a position where you’re struggling to make ends meet, it’s easy to feel like something’s wrong with you. That you are alone in all of this.
The truth is, you’re not alone. An estimated 39.7 million Americans live in poverty – that’s 1 in 8! While this statistic is alarming (no one deserves to live in poverty), it serves as a reminder to not feel ashamed of your financial situation. Even if you’re the only person in your own social circle struggling, just remember there are millions of people out there who know and understand what you’re going through.
7. Keep Saving and Investing (Even Just a Little)
We know what you’re thinking. “Yeah, okay. How am I supposed to save money when I’m struggling just to get by.” Saving and investing are likely the last things on your mind when you’re broke. However, it’s important to keep making contributions to your portfolio. Your current financial situation is likely just a temporary thing. If you stop saving and investing now, you’ll only be hurting yourself in the long run.
The key is to find the amount that works for you right now. If you can only afford to put away $10 a month, do it. It may mean having to cut back on Starbucks, but do you really need that extra latte? Your caffeine craving is probably screaming “YES!” but ignore it. “Future You” will be glad you invested in yourself instead, even when you were just scraping by.
6. Don’t Compare Your Situation to Others
Even when things are going well, social media can make us feel terrible about ourselves. Seeing everyone’s highlight reels tend to make us feel envious or that we’re missing out on something. Unfortunately, experiencing a financial setback can amplify these negative thoughts. As much as it may seem like everyone but you has their life together, it’s not true. Although social media feels like an endless feed of vacation photos and wedding shoots — aka markers of success — it’s never the full story.
All of those “happy” people are struggling with something too. You’re just not seeing it. Heck, a good number of them probably have money problems of their own! Depending on how it affects you, it may be a good idea to take a break from social media until you get back on your feet. Whatever you decide, keep the focus on yourself and try to stop the comparison game. It’s only a recipe for misery.
5. Have a Plan (Preferably Ahead of Time)
Financial setbacks are rarely something we see coming. Life is unpredictable and there’s just no way to know when you might get hit with a sudden job loss or major emergency. Preparing for the unexpected is the best thing you can do to protect you and your family when money problems crop up. It’s why emergency funds are such an integral part of personal finance 101. If you already have a contingency plan in place when disaster strikes, navigating your way out will be much easier.
Unfortunately, with an estimated 78% of people living paycheck to paycheck, most people don’t have any plan in place, let alone an emergency fund. How are they supposed to get through a financial setback? If you find yourself in this situation, the best thing you can do is make a plan as early as possible. This includes things like adjusting your budget (more on that later) and figuring out the steps you need to take to get back on your feet. Making a plan and sticking to it takes considerable work, but it will help you get through this difficult period with confidence.
4. Lean On Your Support System
Many of us have trouble discussing money with friends and family even when things are going well. Bringing it up when you’re struggling? That’s a different chore altogether. As hard as it may be to discuss a financial setback with those closest to you, doing so is actually a sign of strength, not weakness. It takes courage and conviction to be vulnerable and ask for help. There are people who truly care about you and want to see you succeed.
You may also find that your friends and family can help you stay on track to lifting yourself out of your current situation. It’s natural to feel like you will be judged negatively for being where you are. However, those who have your best interests at heart will understand. If they don’t, that is as sure a sign as any that they were never really in your corner to begin with.
3. Cut Your Expenses Thoughtfully
The very first thing you should do when you fall on hard times is to figure out what can get cut. Put a priority on your basic needs and start whittling down everything else. Do you really need a subscription to Netflix, Hulu, and HBO? Is now really the best time to splurge on a new couch? Remember, you’re in survival mode now.
After covering monthly expenses (rent, credit cards, groceries, etc.) most of your remaining budget should go to savings and investments. It’s a major life adjustment, but a necessary one if you’re going to make it through without going into major debt. However, it’s also important to take care of yourself, so make a point to …
2. Treat Yourself Occasionally
Look, there are no shortage of articles out there listing off ways to scrimp and save. The problem with this advice is it acts like humans are emotionless robots. Yes, it makes financial sense to always brew your own coffee at home and never set foot in a cafe. It’s also an incredibly boring way to live and requires the discipline of a monk. Being in a financial funk means you will have very little disposable income. This is just the reality. However, it doesn’t mean you have to be a joyless shut-in who’s not allowed to have fun or enjoy life.
Finding a little money each month to splurge on yourself is important to staying positive during a financial setback. Even if it’s just eating out for lunch twice a month, you’ll be giving yourself something to look forward to. Yes, a smarter decision would be to save that money instead. However, finding small ways to treat yourself is important for your mental health and can actually help you stick to your budget.
Fortunately, there are lots of cost-efficient ways to spend your time out there (did you know libraries have books and they let you just borrow them for free?). But also, don’t feel guilty if you just want to grab a latte sometimes. You only live once, right?
1. Focus On What You Can Control
When we experience a major setback, it can be all too easy to play the victim card. This is especially true if what happened was beyond your control, such as a surprise layoff. While you should definitely give yourself time to grieve and practice self-care, playing the blame game is unproductive and holds you back. Instead of dwelling on the past, focus on the future and what you can control.
What does this look like? Well, your goals (financial or otherwise) are something only you can take ownership of, so that’s a good place to start. The worst thing you can do is give up and convince yourself that you’ll never land back on your feet. Things may be tough right now, but they’ll slowly get better if you put in the work. Take it one day at a time and believe in yourself.
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