Skipton Financial Services
Monday, February 22, 2016 - 15:05

Coping with financial difficulties

It doesn’t matter how well off you are, almost all of us worry about money from time-to-time – and that anxiety can be exacerbated when it comes to coping with financial difficulties.

You never know what’s around the corner, such as:

  • you or your partner unexpectedly losing your job;
  • running up debts, perhaps only realising you have overstretched yourself when it is too late;
  • you fall victim to a financial scam;
  • a huge, unexpected bill that you have no idea how you will pay; or
  • sadly, a long-term illness to you or a loved one, which could have a significant impact on your income.

Such issues could put a real strain on your finances, and leave your short, medium and long-term plans in tatters.

The impact of financial difficulties might stretch beyond any holes in your finances – it can cause emotional distress and affect your self-esteem. Your health may also suffer in the long run.

If you’re in this position, or fear that you are on your way down the path to financial worries, it really will pay off to take a proactive, and positive, approach.

Here’s how:

Face up to the issue as soon as possible

Denial will not make the problem go away, and could even make it worse. Take a deep breath, look into the scale of the issue and begin to consider the options that are available to you.

Retain a sense of perspective

We can all sometimes get too carried away by money stress. So it’s also worth taking a step back and making sure the problem is proportionate – to get to the heart of how it is making you feel. Are you grappling with an urgent problem (like a bill you are struggling to pay) or more general worries about the future (such as if you have enough saved for retirement)?

Examining its consequence against the bigger picture could help you start to feel better, and enable you to begin plotting the right course of action.

Ask others for help

Friends and family can provide emotional support, and professionals can offer practical advice and solutions. In the latter case, and depending on the type of money trouble, you could speak to a debt counsellor or a financial planner.

You are not the first person to feel the way you do, so don’t be afraid to speak up and rely on the assistance of others.

There are also non-profit organisations who can provide support;

Step Change - StepChange.org/

Citizens Advice - citizensadvice.org.uk

Devise a workable plan

This is clearly something that a financial planner can help you with, or you can start to draw it up yourself.

Work out your financial goals; then look at your budgets and your essential outgoings. That way you can build a more scientific-based understanding of where you are now and how you can approach your financial problem.

Prioritise any debts (if you can)

If you are worried about saving for the future, for example your retirement, but you also have debts, it might be wise to prioritise repaying these over saving.

The interest owed on loans and credit cards can make them more difficult to pay off, the longer you leave them. By reducing or eliminating this problem, your outgoings will be considerably less in the long run. Not only would this mean you can then prioritise saving, your desired future lifestyle would feature fewer outgoings and, therefore, become easier to afford.

Protect yourself and loved ones from future financial difficulties

Making plans to protect yourself and your loved ones is not tempting fate, it’s good sense.

  • Can your family ‘make do’ when you die?
  • Would you have sufficient income in the event of a long-term illness?
  • Could your family afford the cost of long-term care if it was required?
  • Is just getting by enough for your loved ones?

These and other potential issues can be planned for and depending on your personal circumstances and the level of support you want to leave in place for loved ones, there are a number of different types of protection available. Speaking to an expert is recommended.

 

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