Life is unpredictable, and there can be moments where your most well-thought actions don’t give you the results you were expecting. If a situation like this has led you to a Financial Loss, don’t worry because mostly everyone goes through it at least once in their lifetime, and sooner or later, they overcome it as well.
Taking stress, especially during this period, can lead to diseases that affect your health physically and mentally. Getting over your financial loss or debt might be challenging, but you can surely get through it when you follow the proper steps.
Ways to Cope with a Financial Loss
Here are nine ways to cope with a financial loss during your hard time:
1. Create a budget
When you create a budget, you limit your spending since you divide an amount for every category. This allows you to stop overspending on things you don’t need and helps you to save money.
2. Pay essential bills
Paying your bills on time gives you peace of mind, and therefore it is recommended that you pay your bills before spending your money anywhere else. If your credit card dues are pending, prioritize paying them at the earliest because getting late on your credit card can attract high-interest fees. It can also negatively impact your credit score, making it hard for you to get loans in the future.
3. Do not take any impulsive action
Whenever we are going through a bad phase in our lives, we naturally feel like taking some impulsive actions that help us solve the problem as soon as possible. In times like this, those actions can be mortgaging your available assets, taking out all your life savings, or closing and withdrawing all your investment.
However, going with these impulsive decisions might harm you more rather than solve things for you. Therefore you should take time out to think before making any decisions to realize its effects in the longer term.
4. Assess the situation impartially
Once you start feeling better and have found a way to deal with your emotions, you must thoroughly assess the situation. Look out for how much money you have lost or how much debt is pending. Make a strategic plan that helps you to rebuild yourself. Take out a list of your assets, keep track of your monthly income and see how you can get out of the debt or loss you’ve faced.
5. Cut back on your expenses for some time
One of the best ways to get out of your financial debt or loss is by taking control of your extra expenses for a limited time. When your cash inflow increases and the outflow decreases, you start saving money over time. While cutting down your expenses, don’t compromise on things like Food because it’s something your body needs to survive; instead, try to cut down on your entertainment and other costs that you can manage without.
6. Increase sources of income
Once you’ve figured out a savings plan, the next step is looking for sources to increase your income because who doesn’t like more money? Now you can earn money while sitting in the comfort of your home. Look for a freelancing job that matches your skills. Start small to build your profile and once that’s done, start charging according to the industry standards. Freelancing can be a great way to make more money.
7. Take measures to avoid similar losses in future
You never want to make the same mistake twice, and hence you must take measures to avoid facing similar losses in the future. Start with looking for the reason due to which you lost your money. Was it in investments like Crypto or Shares that went downward? Next time, you can invest wisely and manage your risk better by having stop losses set on your trades. Invest only the amount you can afford to lose and keep taking profits when you feel comfortable with them.
On the other hand, if you lose a property due to the circumstances you can’t avoid, then looking for an insurance policy might help you decrease your losses next time. Also, there are apps to manage your money you can use them to handle your money better.
8. Find support
If you are dealing with anxiety or stress due to your financial loss, don’t be afraid to find support. Talk to your Family and Friends about the matter and see if they make you feel any good. Visit a Therapist and seek professional help when needed. There are a lot of organizations that can help you with free support, so don’t hesitate to reach out to them.
9. Understand the debt cycle
You can’t get out of debt if you don’t understand it. Start understanding the debt cycle. A study suggests that you can get rid of debt more quickly when you start with paying your smaller debts first. Look out for the interest rates and pay the debts with the highest interest rate to avoid paying more.
If you start feeling discomfort due to your financial stress, don’t forget to talk with someone or ask for help. Financial Loss can be challenging but remember it’s just a phase, and it’ll pass, giving you a lesson to come back up stronger. Keep these tips in mind, and you’ll find your financial health better in no time.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, and personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at [email protected]
© Anupam Karan
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