For many, the events of the Covid-19 pandemic, the lockdowns and the subsequent financial hardships with significant price increases, all of which were in part exacerbated by Brexit and the war in Ukraine have represented significant financial setbacks. This is something that has not been seen for many years. 

There have, however, been financial setbacks in the past. How people dealt with these can, in part, help us when it comes to considering how we can overcome the current issues and bounce back stronger. 

It is estimated that around 75% have experienced at least one significant financial setback in their lives. However, the majority of these individuals have managed to turn their finances around. 

Market losses account for one of the single biggest financial setbacks anyone might experience. However, high on the list of other financial setbacks are not earning as much as you might expect, loss of job, supporting family members, making bad financial decisions, divorce, and even illness. Unexpected expenses like car repairs or medical bills can also have a hugely detrimental impact  on your finances, especially if you don’t have an emergency fund to fall back on. 

Furthermore, the rising cost of living, inflated prices on essential goods, and stagnant wages have made it increasingly difficult for many people to make ends meet even with their usual income, pushing many into financial hardship.

Don’t Hide Away

It can be nerve wracking when opening the post if you’re struggling financially. However, it’s not good to ignore any issues you’re having as there’s nothing worse than letting interest and debts mount up. There is help out there, but you’ll need the courage to access it, and the people who can help you will need to know your situation to help you plan for the future. 

In addition, don’t get disheartened. No matter which financial setback has befallen you, it will take time to bounce back. Recovering from financial problems is not something that will happen overnight. Give yourself plenty of time and remember little steps will give you big results if you follow them. 

Ways to recovery

There are, fortunately, a number of different ways in which you can help yourself along the way to overcoming your financial setbacks. 

• Look at your spending – the most important first step when you have had a financial setback is to take a good look at your spending. Look at what you have to spend out on and how much – your mortgage or rent, your bills and your food. These are your needs. Then you can consider any wants that you might have that fit into your residual money. Remember you do not need all of these, so cut those you can manage without. This will allow you to build up your savings. Consider using budgeting apps or tools to track your spending and identify areas where you can cut back. Every penny counts! 
• Save more, better – Look at ways to change your saving behaviours. This means cutting out unnecessary spending and even considering a savings account. This will give you a better saving rate that will help your money grow faster. Setting up automatic transfers to your savings account each month can make saving easier and less tempting to skip. Make saving a priority, even if it’s a small amount initially. It will gradually add up and provide a safety net for future setbacks.
• Find more income options – It seems obvious, really, but one of the quickest ways in which you can overcome your financial setback is to find new revenue streams. Consider what abilities and skills you have and look for something that will allow you to put these to good use. This could be a side hustle, freelance work, or even selling unused items around your house. Explore online platforms and resources that connect freelancers with clients or offer opportunities for gig work. Be creative and resourceful in finding ways to supplement your income.

Seek professional help

If you are struggling to get your finances back on track, don’t be afraid to seek professional help.A  financial advisor can help you create a budget, develop a debt repayment plan, and make smart investment decisions.There are also non-profit credit counselling agencies that offer free or low-cost financial counselling. These organisations can provide guidance on debt management plans (DMPs), individual voluntary arrangements (IVAs), or even bankruptcy if your situation warrants it. They can negotiate with your creditors on your behalf and help you find a manageable solution to your debt problems.

In addition, if you’re really struggling to make ends meet, several charities specialise in providing financial assistance to individuals and families facing hardship. These organisations can offer grants, food vouchers, or help with essential bills. Research and reach out to charities like Turn2us, StepChange Debt Charity, or your local Citizen’s Advice Bureau. They can offer guidance and support. It may also be worth contacting your local council; some councils have emergency funds that they can use to help you out in certain situations. 

Budgeting and saving tips

Adopting frugal habits can make a significant difference in your financial recovery. Consider batch cooking meals to save money on food. You could also look at taking public transport or car sharing instead of driving every day. Cutting back on unnecessary expenses like takeaway coffees or eating out can also help. Look for free or low-cost activities in your community for entertainment, and take advantage of sales or discounts when shopping for essentials.

Bouncing back from financial setbacks will take you some time. However, it is possible if you put your mind to it. You can learn from the issues that got you into this position in the first place. That way, you can make sure that they do not happen again. Remember, financial setbacks are a common part of life. Overcoming them is a testament to your resilience and determination. With the right strategies and mindset, you can not only recover but also emerge financially stronger than before.