2020 was a year like no other. Regardless of whether you have experienced a job loss or a loss of financial stability, there is always one thing you should keep in mind: you have the opportunity to restore your financial base. Here are 3 steps to jump back.
1. Make a plan
It is time for self assessment! In order to create a recovery plan that actually works, you need to know what you are trying to recover from. Identify two to three areas of focus and only commit to these areas. Remember, when you reach a goal, you can always set a new goal. The key here is to build momentum that will keep you working on your plan. Lots of people tend to take on too much, which leads to a feeling of overwhelmed and exhausted. To avoid this, limit your focus, generate positive feelings about your plan and how it will work in your favor. For example, if you want to focus on rebuilding your emergency savings, you shouldn't be thinking about saving for a newer car at this point.
Make sure your goals are coherent and not competing with one another. Conflicting goals not only scare you off, they also distract you. Remember, creating a plan that you are confident about doesn't come in a day. If you notice increased frustration, take a step back and once you feel refreshed, come back to continue. While you want to set some schedules aimed at achieving your goals, you don't want to set unrealistic timeframes. Remember that after you have a plan for your finances, you should feel empowered.
2. Stay patient
We live in a microwave-safe world. There are so many things that we can easily purchase with the push of a button on our laptops or the tap of a finger on our cell phones. Drive-thru is everywhere and quick convenience has become something that is embedded in our daily lives. As much as we all want our finances to operate on the same wave, we don't – and never will. In most cases, the current state of our finances did not happen overnight. So in theory, we shouldn't expect our recovery process to be any different.
Do you remember what it was like to learn to ride a bike? Training wheels were the first step in getting you used to balancing yourself and learning to steer. Once the training wheels were off, you probably quickly realized that there weren't any reinforcements to make the fall easier between you and the concrete. Lots of bumps, bruises, crying, and attempts later. You finally learned how to ride a bike unaided. What a euphoric feeling! As adults, we can experience the same levels of satisfaction when you understand that patience and commitment always pave the way to our desired levels of financial freedom.
3. Make a commitment to temporary sacrifices
Adulthood is going to throw some curveballs that put us in a frenzied state when faced with something less than desirable. Whenever the word sacrifice is mentioned, many are quick to give up their goals simply because they do not want to temporarily forego something for a greater good. However, sacrifices at any level are inevitable. Everything you currently have was acquired because of your dedication to sacrifice and your financial journey. There are many ways to get your finances back that can be used anytime – not just in an amortization situation.
For example, preparing meals can reduce costs compared to spending a large amount of money on take-away. Committing to limit your entertainment budget can also be very effective. When you take a break from attending any family or friends outings, you are back on track. For those who prefer a more aggressive approach, taking up a part-time job or setting months without spending also come in very handy. You shouldn't feel like punishment and instead set it up as a healthy challenge. Don't you wanna do this alone Gather your family and friends to see who can save the most money in a set time. Create an environment in which you can achieve your goals and re-establish yourself financially.
Which of the above methods can you use to restore your financial base?
Register with Mint today
From budgets and bills to free credit scores and more
Discover the effortless way to stay on top of things.
Learn more about security
Marsha Barnes (9 posts)
Marsha Barnes is a financial guru with over 20 years of experience striving to empower women worldwide to be financially successful. Financial literacy and literacy are a passion of Marsha and provide clients with practical information that builds their general confidence in their personal finances.