There are many reasons why you could find yourself in a financial crisis, from losing your job to dealing with unexpected medical bills or mounting debt. When this occurs, it’s all too easy for panic to set in. However, it’s important to note that you aren’t alone. There are plenty of resources out there that you can use to climb the financial ladder once again. With that in mind, here’s what you should do when your finances take a turn for the worst. 

Don’t panic

Panicking is a natural response to finding yourself in a difficult situation, especially if you’re worried about being able to pay the necessary bills. However, panicking will not get you anywhere. It won’t help you put a plan in place to resolve the situation, and often lends itself to erratic and illogical behavior, which will likely make things worse, not better. Take a deep breath, and get working on a plan of action. 

Work to understand your situation

The next step towards working your way out of a financial crisis is to gain as much understanding of the situation as possible. For example, you should be asking questions such as: 

• What instances or behaviors have led you on this path that you need to rectify? 
• What types of support are there for this?
• What have other people in my situation done to resolve it? 

Once you’ve got this understanding in place, you can put together a plan that will help improve things. For example, if you’re dealing with mounting debt, you could look into debt consolidation or repayment plans. 

Cut back on unnecessary expenses

When your finances take a turn for the worst, you must focus on developing good financial habits moving forward – especially if you’re aiming to pay off debts.  In most cases, this means reigning in unnecessary spending. Write down a list of everything you’ve bought over the past few weeks, labeling them as either ‘necessary’ or ‘unnecessary’. While a few treats here and there are fine, you should then work to cut down on these unnecessary expenses, or find ways to reduce them. 

Increase your income

The other avenue to get yourself out of a financial mess is to increase your income. This is often more difficult than decreasing your expenses but it can be done! Can you pick up an extra shift at work? Are you in a position to negotiate a raise or promotion, or perhaps is a scheduled one coming up on the horizon? There are also lots of options for side hustles – it can be relatively easy and quick to get started with Uber/Lyft, food delivery, dog walker, babysitter; the list goes on and on! Figure out where your skill set or interest lies and start brining in some additional income to help

Ask for help

Whether your emergency fund did not stretch quite as far as you’d hoped, or you feel as though there’s no way out from your situation, there’s no shame in asking for help. This does not necessarily mean you need to start asking friends and family for money – but rather advice and strategies that you can use to pull through. After all, we’ve all been through tough financial times, meaning that we all have advice for those in that situation. Alternatively, you might want to consult with a financial advisor. 

Work with a lawyer

If your financial situation has truly spiraled out of control, it may be worthwhile to declare yourself bankrupt. There are serious implications in doing so though, and so it’s truly meant to be a last resort. You should not do so without the advice and support of a bankruptcy law attorney, who can talk you through the process and what it entails moving forward. This could be the solution to alleviating some of the pressure you are facing and build a better financial future for yourself. 

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