Financial Recovery Tips To Get You Back On Track
This article offers insightful strategies for bouncing back from financial setbacks, highlighting the importance of not dwelling on guilt but rather identifying triggers. It advocates for realistic budgeting, adjusting goals when necessary, and even starting afresh with more achievable plans. The piece also suggests a "personal finance diet" for short-term recovery, automated savings for consistency, exploring side hustles for additional income, and prioritizing ongoing financial education. The overarching message is that, despite setbacks, these steps empower individuals to regain control and confidently navigate future financial challenges.
Maintaining financial responsibility poses its challenges. Unexpected circumstances may compel you to exceed your budget, be it an unexpectedly pricey holiday season or the irresistible allure of a perfect dress that tests your financial restraint.
Just as the occasional indulgence doesn’t have to derail your entire diet, a brief financial setback shouldn’t send your carefully laid financial plans into disarray. Here, we present eight steps to guide you through a personal finance recovery, ensuring you can swiftly realign with your financial goals.
- Don’t feel bad and figure out what happened. Don’t beat yourself up about it. Falling off the wagon happens to everyone. But as long as you acknowledge that you need to get back on the wagon, you’re already on the right track. Just take a hard look at your finances and see if you can figure out what pushed you off the wagon so you can avoid it next time. The next items on this list are some possible triggers; maybe one of these is the culprit?
- Don’t make your budget too strict. A lot of people set themselves budgets that are way too restrictive, and are surprised and disappointed when they can’t stick to it. Then they give up on the idea of budgeting at all and fall off the personal finance wagon completely. Don’t let this happen to you. If you set yourself a new budget for the new year but are having a hard time sticking to it, give yourself a more flexible budget that gives you more freedom but still allows you to save. Check out some examples in our article about budgeting methods.
- Adjust your goals. If you set yourself a goal to save P1,000 every month to save P12,000 throughout the year, and you miss a month because of unforeseen circumstances, it’s OK to lower your goal for the year to P11,000 so that you can still achieve it by December. Adjusting your goals to be more achievable is better than sticking to your original goal when it’s impossible to keep up any more. Saving only P11,000 of your original P12,000 is better than saving none because you kept falling behind and kept getting discouraged, giving up altogether.
- Go on a personal finance diet. If you fell off the wagon one month but are still dead set on saving that original P12,000, you’ll have to go on a personal finance diet to reach that goal. Take a “spending vacation” and cut down on your spending as much as possible for a month. Going super frugal and saving at a higher rate for one month can help you a lot — by the time the next month rolls around, you’re back on the wagon, like you never fell off at all, and you can go back to your normal spending habits. Here are 37 ways to save more money you can try to accelerate the process.
- Start from scratch. It could be that the reason you’re falling off the wagon is you’re on the wrong wagon. Sometimes, the best step to take is to throw out all your plans and budgets and start from scratch, with a blank slate. Maybe you shouldn’t be working so hard at saving P12,000 when you’ve got P20,000 in credit card debts. Or perhaps you shouldn’t even be looking at down payments for cars when your lifestyle doesn’t really permit for one. If it looks like the reason you’re not successful at sticking to plans is that you’re making the wrong ones for where you are in life right now, it’s OK to start all over and make new plans that are more realistic and more reachable.
- Leverage automated savings plans. In today’s fast-paced world, automate your savings to make financial responsibility effortless. Set up automatic transfers to your savings account right after payday. This way, you prioritize saving before daily expenses tempt you to overspend. Automated savings plans can help you consistently build your financial cushion without the need for constant manual intervention.
- Explore side hustles. In the gig economy era, consider exploring side hustles or freelance opportunities to supplement your income. Having an additional income stream can provide a financial cushion and make it easier to stay within your budget, even when unexpected expenses arise.
- Prioritize financial education. Stay updated on the latest financial trends and strategies. In today’s fast-paced world, financial literacy is crucial. Attend workshops, webinars, or online courses to enhance your knowledge. Being well-informed about personal finance can empower you to make informed decisions and adapt your financial plans to evolving circumstances.
Falling off the wagon feels terrible — but getting back on will be empowering. After you deal with this blip following the steps above, you’ll feel more in control of the financial aspect of your life. It will give you peace of mind, safe in the knowledge that no matter what roadblocks meet you on the way to financial security, you know how to get around them, and how to get back on the road if you get pushed off it.