Life can be unpredictable, and sometimes, money troubles can sneak up on you out of nowhere. It could be a global economic drop, a personal setback, or losing your job suddenly.
Dealing with these money struggles and tough times might seem pretty scary. With some smart moves and a clear plan, you can not only ride out the storm but also bounce back even stronger.
That’s why, together with Payday Depot financial experts, we’ve prepared a step-by-step guide with some practical tips and handy financial advice to help you navigate a financial rough patch like a pro.
How to Navigate Money Struggles
Addressing your financial health issues head-on is crucial for several reasons, and it’s important to understand and emphasize the significance of this proactive approach.
Tackling financial issues as soon as they arise, and paying off your debts can prevent them from escalating into more significant problems.
For example, addressing a small debt promptly can prevent it from ballooning due to interest and fees. Financial problems often have a domino effect and addressing them early can prevent a chain reaction of related issues.
The sooner you confront your money struggles, the quicker you can move towards a more secure and prosperous financial health path.
Step 1: Save Up for that Day
Having an emergency fund is like having a safety net. Aim to put away at least three to six months’ worth of living expenses. If you have a more unpredictable income or job security concerns, consider saving more (up to 12 months of expenses).
You need to determine your monthly expenses before you know what to save. Include essentials like housing, food, utilities, transportation, insurance, and minimum debt payments. You don’t necessarily need to include non-essential expenses as these are things you can do without if you are experiencing money struggles.
Start saving bit by bit, even if it’s just a small amount of money, and open a dedicated savings account. Set up automatic transfers from your checking to your savings account right after payday, this will ensure consistency and reduce the temptation to spend.
Your emergency fund should be easily accessible without any penalties or significant delays. Having this safety net will help you live easier when times get tough.
Step 2: Sort Your Spending Priorities
When money’s tight, it’s time to be picky with your spending. Start by focusing on covering the must-haves like housing, utilities, groceries, and insurance.
Reducing daily expenses is a key strategy in improving your financial health. Here are practical tips to help you cut down on everyday spending:
- Budgeting Apps: Use budgeting apps to monitor where your money goes.
- Review Regularly: Regularly review your expenses to identify areas where you can cut back.
- Meal Planning: Plan your meals for the week to avoid impulse buys.
- Shop with a List: Always shop with a list to avoid impulse purchases.
- Use Coupons and Discounts: Take advantage of coupons, loyalty programs, and sales.
- Public Transport: Use public transportation instead of driving.
- Entertainment: Look for free or low-cost entertainment options.
- Subscriptions: Cancel unused subscriptions and memberships.
- Eating Out: Limit dining out and opt for more affordable options when you do.
- Home Repairs: Learn basic home repair and maintenance skills.
- Personal Care: Do simple beauty treatments at home instead of visiting salons.
- Wait Before Buying: Wait 24-48 hours before making a non-essential purchase.
Put the brakes on non-essential spending, like eating out and entertainment. A priority list will help you spend your money wisely.
Step 3: Talk to Your Money Lenders
If you’re having trouble paying off your debts, don’t hide from your creditors. You need to do exactly the opposite.
Reach out to them and try to negotiate lower interest rates, deferred payments, or other ways to consolidate your debts. Keeping the lines of communication open can stop your money troubles from going out of control.
Step 4: Hunt for Extra Cash
A little extra income can be a lifesaver during a financial crisis. Look for part-time jobs, freelance work, or opportunities in the gig economy. Some ideas for side hustles and a little bit of extra cash include;
- Offer your professional skills (writing, graphic design, programming, etc.) on freelance platforms like Upwork, Fiverr, or Freelancer.
- If you have expertise in a specific field, consider consulting for businesses or individuals.
- Sell products on platforms like Etsy, eBay, or Amazon
- If you’re crafty, sell your handmade items (jewelry, art, crafts) online.
- Start a dropshipping business where you sell products without holding inventory.
- Work as a driver for Uber, Lyft, or other rideshare services.
- Deliver food for services like DoorDash, Uber Eats, or Grubhub.
- Deliver parcels or documents, especially if you live in a busy city.
- Offer tutoring services in subjects you are knowledgeable about.
- Teach a language you are fluent in, especially if it’s in high demand like English, Spanish, or Mandarin.
- Start a blog on a topic you are passionate about and monetize it through ads, sponsorships, or affiliate marketing.
- Create and monetize a YouTube channel.
- Offer dog walking services in your neighborhood.
- Conduct workshops or classes in your area of expertise (e.g., painting, woodworking).
Use your skills and talents to get some extra cash. Every dollar in your pocket can help steady your financial ship.
Step 5: Keep It Cool
When cash problems hit, emotions can go haywire. Fear, panic, and stress can lead to rushed decisions that will only make things worse.
Stay calm, stay rational, and keep your eyes on your long-term goals. Don’t make big money moves without thinking them through or chatting with a trusted advisor. Make sure you communicate with your family and with money lenders, who will all be on hand to help out!
Step 6: Boost Your Money IQ
Dealing with financial struggles is a perfect time to update your money knowledge. Loads of resources can help make you better with money, such as;
- Read Books and Articles: There are countless books on personal finance, investing, budgeting, and financial planning.
- Online Courses and Webinars: Take advantage of free or paid online courses and webinars that cover various aspects of finance.
- Follow Financial News: Regularly read financial news from reputable sources to stay updated on economic trends and financial advice.
- Subscribe to Financial Blogs and Podcasts: Find blogs and podcasts that resonate with your financial goals and interests.
- Budgeting Apps: Utilize apps to track your spending and manage your budget.
- Investment Simulators: Use online simulators to practice investment strategies without real money.
- Financial Advisors: Consider consulting a financial advisor for personalized advice, especially for complex situations like retirement planning or investing.
- Tax Professionals: For tax-related matters, seeking advice from a tax professional can be beneficial.
- Review Your Financial History: Analyze your past financial decisions – what worked, what didn’t, and why.
- Set Financial Goals: Use your experiences to set realistic and achievable financial goals.
The more you know, the better choices you can make.
Step 7: Keep Tabs on Progress
As you put your recovery plan into action, keep an eye on how you’re doing. Make sure you check your budget, see how you’re spending, and in time, see your debt shrinking.
It helps to celebrate the small wins, like paying off a credit card or hitting a savings goal. Tracking your progress will keep you on track and motivated.
Navigating a financial storm and money struggles isn’t easy, but with some smart planning and discipline, you can turn things around. Remember, every crisis is a chance to grow and learn.
By sizing up your money situation and getting expert advice when needed, you can come out of a financial storm stronger than ever.