Are you facing a severe financial setback? If yes, don’t worry – you’re not alone. In fact, the recent Covid-19 pandemic has crashed the stock market, banking, and real estate, leaving many people in the same position.
To be honest, you can’t control everything, but you can definitely control your financial health. Your financial behavior and decisions are 100% under your control. You just need to find smart ways to recover from a financial setback.
Good news, as we’re here for you with simple but smart ways to help you regain your financial health.
So, let’s get started!
Accept Your Financial Situation
The road to regaining financial health starts with accepting reality and stop whining about your misery. Yes, you might be facing all these problems because of the wrongdoings of somebody else. But does it matter now? Let bygones be bygones.
Living in the past will drain all your positive energy. You need to recollect your energy to start rising back, so accept reality and move forward. Not only is it the right thing to do, but it’s the best way to start your growth, and face new challenges to move forward to success.
Therefore, you need to accept your financial condition and get started with a clear valiant strategy.
Take Inventory of the current situation
The second way to regain your financial health is to take your current financial situation into an account. You must consider your resources and liabilities before developing your strategy to rise back from a recent financial setback.
You must know where you’re now when you’re developing a genuine plan to get you where you want to go. Consider it as a road map to a destination. You need to first know your current location before selecting an appropriate route to reach your destination.
Likewise, before making your future financial plan, you need to take inventory of your current financial situation.
Start by thinking about the points mentioned below to assess your current financial situation:
● Your remaining assets
● Money you owe
● Income you bring monthly
● Long term interference of financial disaster that could potentially affect your recovery plan (pandemic, health issues, etc.)
● Your credit score
The idea is to know what other aspects you need to consider that could affect the ‘regaining financial health’ process.
Define your financial goals
After assessing your current financial situation, you need to define your financial goals.
Just like our previous road-map comparison, after locating your current location, the next thing you locate the destination where you want to go.
So, once you know where you are now (your current financial health), and where you want to go (your future financial health after regaining), the only thing left is to plot the route to get you there.
So here are some ways that can help you set your financial goal:
Your financial goal must be clear. For instance, “I want to get rich” is too general and unclear. On the other hand, “I want to make $20,000 per month profit after taxes until 2025” is specific and clear.
You need to ensure you’re measuring your recovery. In the aforementioned example, the measurement is profit in dollars each month. We also suggest you break your big goals into segments. Such as, how much profit you should make after one year from now?
Time your progress, give these small segments deadlines, to convert your wishes into a smart strategy. It will also assure you that you don’t slack off.
There’s a thin line between setting a goal that’s within your reach. You neither want to make it too easy, nor you want it to be unrealistic. So set a financial goal that stretches you out of your comfort zone while being within reach.
If you’re having a bad credit score that’s close to bankruptcy, becoming a millionaire in one year isn’t a genuine and realistic goal. So, make sure your financial health goal is realistic and genuine.
Rebuild your credit
A great credit score helps you in various financial situations. For example, it’s easy if you want to apply for a mortgage, allowing you to get the contract with the best interest rates, insurance, and fewer down payments. However, your recent financial setback may have affected your credit score. So make sure you know ways to rebuild your credit.
Develop your strategy
Now, it’s time to build your plan for the financial recovery goals you set. One way is to start by paying off your bad debt and investing in retirement savings, or other assets.
One mistake most people do is to do nothing except paying off bad debt. You need to add little rewards too, to make it more fun and rewarding. This will help you stick to your financial goal road-map, and help you take consistent action to move forward with your financial recovery strategy.
Correct, Learn, and Adjust
No, your plan doesn’t have to be perfect from the start. Just go with a smart approach and correct your actions as you learn about your mistakes. Try not to repeat the mistakes and adjust your course of action accordingly. You learn from your experience!
The key to financial recovery is a smart, realistic, and disciplined approach with patience. However, it’s important to build the habits that help you to achieve financial success, and allow you to make better financial decisions. Without them, it will be difficult to maintain your financial plan, and the chances of slacking off will become greater. Therefore, if you take control of your financial behavior and decisions, and follow the aforementioned ways, you will regain your financial health sooner.