Dealing with a financial crisis is one of the most unpleasant things any person can endure. It comes in many forms. On a personal level, you could experience some of the hardest things we ever have to go through: a sudden death, an unexpected medical bill, a car accident or home repair, or the loss of income.
On a much larger scale, a financial crisis at a national level can be devastating. For people living paycheck to paycheck, these occurrences might derail their entire lives. However, even for someone that’s financially sound and caught up on payments with an adequate savings could still go bankrupt and lose their car or even their home.
Fortunately, many people have weathered the financial storm before and there is a lot of good advice on how to manage an economic or personal financial crisis and with the help of a financial plan, like the guidance given at Factum Financial, you can steer clear of those murky financial waters.
Personal Financial Crisis
If you’re experiencing a financial crisis or may be on the verge of one of the aforementioned disasters, don’t panic too much. Many people have been in your position before and there are crucial steps that you can take to make it through relatively unscather. Here is how you can manage your crisis:
- Don’t Panic And Don’t Get Lazy – Often times when people are faced with a sudden crisis, their first reaction is to panic. Who wouldn’t right? A financial struggle is one of the most painful things you might ever have to go through, literally. Scientists found in a 2016 study that people reported feeling pain at double the amount during a financially difficult time.
Furthermore, when things get difficult, some people get lazy or try to distract themselves from the issue at hand. While it may be difficult to deal with, putting off handling the issues you need to solve could cause them to compound and become worse.
- Make And Stick To A Budget – You’re going to have to make a budget to survive any financial crisis. A budget will help you keep track of the money coming in and out of your account and you will know if you are living within your means.Under budget, it’s important to be aware that you are going to have to cut some things out of your spending burden. Cut down on things that can stretch you thin, like cable or even high speed internet. Find extremely cheap or free activities that you enjoy to occupy your time. Basically, you need to cut down on the spending and live within your new budget while you recover
- Find A Side Hustle – Whether you are struggling financially or not, there are a lot of things you can do to earn a little cash on the side. Some you can even do from the comfort of your home. There are still a lot of people on Ebay or Amazon that will purchase unused possessions but there are also modern options like Letgo or Offerup. You can drive people with Uber or Lyft, deliver food with Grubhub or Doordash, or even deliver groceries with Instacart. People have found a lot of success renting out their spare rooms, their basements, and even their tents and campers on Airbnb. Turn your situation into an opportunity however you can.
- Persevere – This isn’t an exhaustive list of solutions but they are starting points that you can jump off from to deal with the personal disaster in your life. You can find a lot of helpful resources out there to help you develop a plan. If you are limited physically because of an accident or sudden sickness, you will have to give yourself time to recover. If you have to search for a job, these steps will help you maintain a relatively unrestricted lifestyle while you search. Overall, you will just need to harness the strength to persevere. As with any crisis, you will recover with effort and patience.
A personal financial crisis isn’t easy. If you are on the verge of disaster, see the warning signs, or perhaps you’re already struggling, you can contact a wealth strategist with Factum Financial to work out a strategy to help.
Economic Financial Crises
An economic crises on a national or global level is something entirely different and although some solutions might be similar, there are very different parameters for surviving a major economic crisis. According to the research article “Financial Crises: Explanations, Types, and Implications” there are 4 major types of global financial crises:
- Currency Crises – doubt over a country’s exchange rate
- Sudden Stops – a sudden end to investment capital
- Debt Crises – a rapid increase in public debt compared to tax revenue
- Banking Crises – a classic bank run where everyone tries to withdraw their money at once.
No matter what form an economic crises comes in, the ripple effects can be very intense and widespread. You could see housing markets slump, investments plummet, and companies make personnel cutbacks or even shutdown. To weather the storm, there are a few things you can do to prepare, such as:
- Develop An Airtight Financial Plan – If you spot the signs of economic downturn, and there have been numerous signs within the last month, creating a strong financial plan that provides for immediate need, midterm savings, and consistent retirement savings is going to be vital. You need consistency, protection, and growth to make it through. If you need a good plan, Factum Financial can help you get started.
- Eliminate Debt – Debt can be a huge burden during an economic downturn, especially if the downturn causes you to lose your job. Pay off debt as early as possible so you can eliminate the high interest rate burdens and save money.
- Move Money Into Conservative Investments – This is crucial to protecting your savings, especially when it comes to retirement. Those that choose to harness the lightning on the stock market or in other risky investments are sure to get struck when the economic clouds grow dark. Solidify your future in a sound investment that grows safely and with consistency.
With either scenario of financial crisis mentioned above, sound investments and a solid financial plan are the key to your success. With a bear market looming just outside of the periphery of American investors, we could all be pinching pennies and tightening our belts in the near future.
Fortunately, you can turn to the wealth strategists at Factum Financial. Our team will guide you through time-honored strategies you can use to grow your wealth safely and conservatively with Infinite Banking. Contact a member of our team today to set up a free 30 minute wealth strategy session and build your plan for a strong financial future.
Click here to read previous insights from our team.