Here's how you can deal with financial stress and lighten the burden.
If you find yourself in tough financial circumstances, don't torture yourself. You are not alone. Difficult financial situations can happen due to external factors like illness, or due to controllable factors like poor financial planning. If your finances are causing you stress, here are some steps you can take to fix it.
Step 1 – Determine if you are in a difficult financial situation
Your financial situation is classified as difficult when you, as an individual or a business, cannot make repayments you are responsible for. These responsibilities can include car payments, mortgages, credit card debt, loan debt, or even simpler things like being unable to buy food for yourself and your family.
Step 2 – Determine the main causes
- Illness or injury
An unexpected illness or injury can cause chaos with your finances if you don't have emergency savings to draw on.
- Income or expenditure changes
Whether you're self-employed or on a salary, a change in income can be hard to deal with.
If you lose your job, that's definitely a source of financial stress!
If an income earner dies or if you're forced to take time off work for bereavement, finances often suffer.
- Relationship changes
A change in your marital status, a bad break-up, or a family issue can you to fall into financially pressing situations.
- Natural disaster
Although this is less common than many other causes of financial stress, it can cause major disruption.
Step 3 – Take the appropriate course of action
There are some basic steps you can follow to reduce stress.
Create a buffer
Creating a financial buffer should be one of the first priorities on your financial planning list. Saving "rain day money" can help you cope with any of the situations above. The following financial products can assist in creating a buffer:
Stick to your budget
Many people set up a template for their budget and stick to it for a month or two before falling off the wagon. End result? Panic, pressure and inadequate savings. Follow our tips for setting a budget and sticking to it.
Pay off your debts
Start by tackling your smaller debts and the ones that attract the most interest. That will give you a sense of achievement and motivation to tackle the bigger debts.
Most Australian banks have options to help individuals and businesses work through difficult financial situations. These support structures can include:
- Refinancing your debt
- Reducing regular payments or extending the loan term
- Delaying a payment date
- Debt counselling
- Financial counselling
If you would like free financial counselling you can call the Financial Counsellors hotl
This is one of the most overlooked steps in dealing with difficult financial situations. Many people panic because of financial stress, get some form of help, and then find themselves back in the same mess months or years later.
Financial habits have to change and be formed into new ones and for this to happen, people need to educate themselves. This is the most powerful long-term solution to dealing with difficult financial situations.