Take simple steps on the path to recovery from financial disasters

Have you ever opened the washing machine and instantly spotted the remnants of a tissue that has gone through the wash? It’s a big mess, and super annoying because you know it could have been avoided.

But no amount of frustration will allow you to travel back in time and check those pockets again. All we can do is jump in and clean up the problem. Money mishaps are something else that we’ll run into from time to time. They can range from minor oversights such as paying a bill late and incurring a fee, through to significant miscalculations like putting all of savings into a hot share tip only to see it lose most of its value.

So given that money mistakes are a part of life, how can we respond in a useful way and build our financial resilience at the same time. Let’s have a look at some practical steps to bounce back from these situations.

Start where you are:

What happened? The first step in any recovery is acknowledging the mishap. Did you overspend on your credit card? Miss a bill payment? Or didn’t get your plan right? It’s not about blame, though it is important to clearly identify what went wrong.

What’s the impact? Is it a really big deal, or just a minor problem? Take an honest look at the impact of your mistake.

Don’t overblow the issue, and equally don’t put your head in the sand. How does it affect your current budget, savings, and debts? Do you need to change any goals, or timeframes? Understanding the consequences will help you in formulating a recovery plan.

The path to recovery

Make a plan. Create a realistic plan to address the issue. This might involve setting up a new budget, cutting back on non-essential expenses, or planning to repay debt.

Savings. If you don’t already have a rainy-day fund, now is the time to start. Or if you had to dip into your emergency fund to deal with the issue, then plan to top it back up.

Autopilot. If you missed a bill, then automate it to avoid a repeat. If you overspent and couldn’t save, then put your savings on autopilot with a regular deduction. Automations take the hard work out of financial management and help you to maintain discipline.

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