4 Tips for Getting Through Financial Hardship
Are you feeling overwhelmed by financial difficulties? You are not alone. The COVID-19 pandemic, coupled with the high inflation rate in the past few years, has resulted in financial pressure for most people worldwide, negatively impacting mental well-being. According to a recent survey, 42% of adults attribute the toll on their mental health to money problems. If you are wondering how to get through financial hardships, here are four tips to help you regain control of your finances and ease stress and anxiety.
1. Identify the source of financial hardship
Financial hardships are often the signs and symptoms of a bigger problem. For this reason, you should identify the underlying source of your economic issues. The following are common underlying causes of financial hardships:
- Reduction of income or unemployment
- Sudden family or personal health issues, accidents, or injuries
- Substance abuse and addiction
- Moving to a new city
- Death, divorce, or separation from a partner
Once you identify the source of your monetary difficulties, you can develop an effective long-term solution. For instance, suppose the basis of your financial problem is substance abuse, and you are spending too much to satisfy the addiction. In that case, you could consider seeking counseling to enable you to overcome the addiction to improve your financial situation.
2. Set a budget
If you are experiencing financial hardships and do not have a monthly budget, you should consider creating one. If you already have a budget, but it is based on your previous financial ability, consider adjusting it to suit your current situation.
To set up a realistic budget, start by tracking your expenses to determine where you are spending your cash and how much you spend. You should then look at areas you could save some money. For instance, you could cancel subscriptions or raise insurance deductibles to lower premiums to save money. Next, create a budget that caters to core essentials, such as food, housing, medicine, transportation, and vital utilities.
If you have no income due to unemployment, apply for Ontario Works benefits to get financial assistance to help you pay for core essentials before getting another job. But remember to budget your spending to reduce the amount of lender financing you can take on.
3. Supplement your income
Cutting your budget can help you survive financial hardships. However, this may not be enough with the current high cost of living and inflation. Consider finding an additional source of income to avoid making your tight budget a source of additional stress and anxiety. Below are ways to earn an additional income:
- Request to put in some extra time every week
- Find a side hustle
- Sell household items you no longer use
- Ask for a raise
4. Consolidate your debts
Managing multiple outstanding debts can be challenging. Not only can it result in missing bill payments. Multiple debts attract high-interest rates, which exacerbate your tough financial situation. To make your debt repayment more manageable, you should consolidate outstanding debts.
Debt consolidation involves using one debt source to pay off other lenders, so you only have to manage a single monthly payment. This lowers interest rates, improves your credit score, and reduces stress.
No matter how financially responsible you are, sudden illness, retirement, and unemployment could result in financial difficulties. Identify the underlying cause of your financial hardship, create a budget, consolidate your debt, and supplement your income to overcome financial problems.