If you struggle with money, you’re not alone. Everyone, regardless of their level of income, faces some money challenges. Still, there is little comfort in knowing that other people have financial crises from time to time.
An illness, either a personal illness or a family member getting sick, can cause a financial crisis. Even if you have insurance, you might still incur some out-of-pocket expenses.
Everything could be going your way when an unexpected financial crisis occurs.. Perhaps losing a job for no fault of your own. Perhaps a freak incident, like a water pipe burst in your home. These unexpected events could involve heavy out-of-pocket expenses.
Sometimes, too, a financial crisis could happen because you weren’t paying attention and spent too much money with your credit cards.
But after a financial crisis, things don’t have to go from bad to worse.
Regardless of the cause, here are some ways you can always turn things around:
After resolving a financial crisis, you may find yourself in debt. This often occurs because credit cards can provide immediate relief during an emergency.
Unfortunately, you may also find it’s hard to continue to pay the full balance every month. What’s more, as your interest payments rise, you’ll end up paying less on the principal.
Jackson Funding can help you get out of this no-win situation by offering you a consolidated loan. Instead of making multiple payments throughout the month on a high-interest credit card, you’ll only make one payment a month on a low-interest loan.
Create a Realistic Budget
Budgeting works if you first prioritize then track your spending.
Prioritize Your Spending
If you don’t prioritize your financial plan, it will collapse. It’s unrealistic to create a budget that does not align with your lifestyle and habits.
Dedicate some time to just thinking about what is important for you. Your largest spending category spending should be on things important to you.
If, for example, you like to eat organic fruits and vegetables, buying inorganic produce because you didn’t allocate enough money for it will tempt you to abandon your budget.
Instead of lowering your standards, cut back on other areas in your life. Perhaps you spend too much on entertainment. Cut back on entertainment expenses so that you have more money available to buy organic produce when you go grocery shopping.
Your budget will work if you identify your top money priority.
Track Your Spending
While you probably notice that you have less money available when you need it the most, you may not be fully aware of where all the money went.
Try this: imagine that you are a detective assigned to do some forensic work on your disappearing income.
There are two ways of tracking your income:
- Track your cash. If you often pay in cash but aren’t sure where you spend most of your money each month, then record your purchases for a month.
- Track where you spend. If you rarely pay in cash, but use checks, debit and credit cards, and online payment processors like PayPal, but aren’t sure where you spend most of your money each month, then review how you spent money last month. First, gather up all your financial records, such as credit card statements, bank statements, electronic payments, and so on. Then, use a spreadsheet to analyze your spending habits. You might, for example, discover that you spend too much on unnecessary travel expenses.
By tracking your cash spending or looking at your financial records, you will get a clear picture of where your money is going. This will make it easier to make adjustments on how you spend your money.
Avoid Spiraling into Debt
After a financial crisis, it’s possible to spiral into increasing amounts of debt. But this is not inevitable. You can turn things around by managing your debt and creating a budget that works for you.