If you’re suffering from a serious financial setback, remember – you’re not alone and there is help at hand.

Although it’s always good to have a positive mind-set, we all know that the reality is we need to be prepared financially for the loss of our job or income, a sudden medical emergency or an unexpected financial setback. Being faced with any of these challenges can be a scary time so it is important to be prepared.

Instead of wasting time worrying, put your focus on creating a realistic financial plan in place so you can be ready for whatever the future holds. If you’re dealing with a difficult issue right now, then these three tips will help you gain clarity and create a path to a healthier financial future.

 

Tip 1: Do an A.B.C. financial audit

a) Assess your situation. What assets do you have and what do you owe? Get your financial affairs in order and face up to the situation you are in. You may be surprised and find that you’re owed money from the three years of tax you have been avoiding doing.

b) Include any personal debts you have such as money owed to family. If you have something of value that you don’t need then sell it. Consider decluttering your home and having a garage sale. If you can get extra weekend work, then take it. Get clear on what and who you owe. What are the current terms around these loans or debts? Keep all of this information in one place so you can track and control the situation.

c) Ensure you have adequate private medical cover and car/home insurance if you require it. Also, make sure you aren’t wasting money on unnecessary insurance cover. Are you on the best deals for your mobile phone, electricity and more? Consolidate your bank accounts and superannuation accounts, you just need one main account to eliminate wasted fees. Investigate special credit card offers which offer a six month interest free period. If possible, transfer your debt to allow you breathing space to save and pay down your debt. In this time, ensure you’re living on the minimum amount you need. Use what you have before making any new purchase and ask yourself; ‘do I really need this?’

 

Tip 2: Look at your financial history

Do you have a pattern of getting into difficult financial situations? Think about your financial history and your current situation. What could you have done to avoid any of these situations in the past (and present)?

Take on the lessons you can learn – even if it is something you don’t want to look at – and if you think you’d benefit from seeking financial or psychological advice, then seek expert support to help you. If suitable, be transparent with trusted friends and family and tell them you need their support.

 

Tip 3: Create a realistic financial plan

Now is the time to create a new financial plan. Work through your budget and bills. Divide these into ‘must haves’ and ‘wants’. For example, having a mobile phone is necessary but having the latest iPhone isn’t.  If you have a spare room at home, then consider renting it out short-term for extra cash. Can you move somewhere cheaper or sell your car and get public transport for a year or so? Ask the hard questions and think of your situation as though you were advising a friend. What would you tell them to do?

Once you put a livable plan in place with then you can get started on paying off your debts. Wherever possible earn more and spend less. Cancel unnecessary automated payments. Sit down and review your accounts and budget once a month. If you have a partner, then set a monthly dinner date (at home) to go over your finances to ensure you stay on track either paying off debts or saving towards future goals. As soon as possible, begin a savings plan to put aside 10 per cent or more of your income to create a financial nest egg.

 

Taking control of your finances feels absolutely fantastic and allows you the freedom to enjoy the moment, whatever your situation. Good luck!