How to Get Back On Track After a Financial Setback

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financial setbackAccording to Money Magazine, 78% of Americans will have a major financial setback in any 10-year period. If you’re reading this, then the odds are you’ve had one. Perhaps it wasn’t major, but even a minor financial setback like an unexpected bill or an auto repair can leave us reeling.

Do any of these sound familiar?

  • Losing an income

  • Losing a job

  • Major car problems

  • IRS audit

  • Unexpected pregnancies

  • Unexpected medical bills

  • Unresolved poor money management

Those are ALL things I’ve experienced since living on my own, getting married, and starting a family. They’ve all taken place within the last 10 years. I call that last one my “head stuck in the sand” syndrome.

Your list will look different, but a financial setback has a universal effect on us.

  1. It attacks our dollars.
  2. It attacks our resolve.

Losing traction on financial goals ultimately results in losing money. Or you could say it prevents greater opportunities to grow wealth.

We also take a hit emotionally and psychologically. If we’re going to look at how to bounce back from a financial setback, we’re going to have to keep both of those things in mind.

How to Get Back On Track After a Financial Setback

Bouncing back has more to do with your mindset than your account balance.

Here are five steps you can take today to get back on track:

Acknowledge your setback.

One of the bravest things a drug addict or an alcoholic or a workaholic or a you-fill-in-the-blank can do is admit that there’s a problem. It’s the same with our finances. I already told you that I’m a recovering “head in the sand” problem evader. Acknowledging my financial setback liberates me to move forward with an action plan to improve.

*Side Note: One of the most powerful tools in my arsenal when I rose above my own faults and acknowledged them was the support of my spouse.

Learn from it.

I write the budget each month, and my husband and I split paying the bills. We go over the budget together, but it doesn’t always mean I carry it out the way it’s written. Whenever I veer off course, put off doing a budget, stick my head in the sand and ignore our overspending, we lose traction. We lose focus. It starts with my attitude and results in losing money.

Now that I’ve started brushing off the sand and forcing myself to face some of those bad habits (for example, being honest and open with my husband about areas where I struggle), it has calmed the little, raging, judgmental imperfectionist in me.

View your setback through a different lens.

Losing one of our incomes was a financial setback, but it enabled me to be home full-time with our children. Despite the cutbacks, it was still a dream come true for both of us.

Back to back pregnancies may have resulted in a continual flow of medical bills, very little sleep, and more body shifting than one woman should ever endure, but what was the result? Two wonderful, healthy, close-in-age-but-on-most-days-adorably-happy kids.

financial setback

Make one change.

Don’t you hate it when bloggers tell you to “make a change,” toss in a  smile + wink emoji, and be on their way?

The other day, someone posted on Facebook, “How do I stop drinking so much soda?” Twelve people answered back, “Just stop.”

As aggravating as that advice is, it’s ultimately the correct answer. Target one thing that needs to change in order to prevent this financial setback from derailing you again.

For example:

  • Cars don’t last forever. Start a car repair fund. Designate a monthly amount and add it to your budget.
  • Jobs end. If you don’t have a dime set aside for that possibility, I suggest getting $1,000 into an emergency fund as fast as you can.
  • Medical bills happen. Could be an injury. Could be an illness. Could be a baby. There are ways to save on unnecessary expenses for your little one, but they simply cost money. Totally worth every penny, by the way.

Choose when.

This is your action step – your takeaway. Now it’s time to put things into gear and move forward. When will you start to pick up the pieces from your most recent financial setback? Try picking up one piece today. That might just look like acknowledging it to your spouse or accountability partner. It’s a start.

Final Thoughts

The thing is, upon closer inspection of my list of financial setbacks in the past, I see something besides numbers. I see life happening. It’s not great that we went through all of it, and the majority could have been better prepared for (we’re not even going to talk about that IRS audit ::sigh::). But it was still life. We learned from every event.

If I could boil down everything I’ve learned about financial setbacks into one thought, it’d be this:

Picture how this would feel next time if you were ready for it.

The money might still be spent, but your emotions, mindset, stress level, and relationship with your family will look a lot differently. To me, that makes this whole thing worth the hassle.

Tell us about your most recent financial setback and one lesson you learned from it.

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