Life throws us curveballs every once in a while. Sometimes, these surprises have a financial impact.
Maybe you have been on the receiving end of one of these financial surprises. Or it could be someone you know, a friend or family member.
What does a financial curveball look like? It could be an investment that turns south, or a poor business decision that comes with unforeseen and expensive consequences.
In many cases, there’s no one to blame for these financial mistakes—it could just be a spell of bad luck. But it’s still on us to deal with the aftermath, whether the fault is ours or it’s due to the randomness of the universe.
In the worst-case scenario, a financial surprise can put us on the brink of insolvency. But no matter how nasty the curveball is, it’s important that we step up and take control of our own financial situation. Getting back on your feet may be a long, hard road, but every step gets easier once you start.
I’ve outlined some steps you can follow to help you or a friend mitigate the losses from a financial mistake and get back on more stable footing:
- Don’t Panic. First of all, recognize this mistake is not the end of the world. In all likelihood, you have a close-knit circle of friends or family members who will support you. An emotional reaction could make a bad situation worse, so take a moment to put all things in life in proper perspective.
- Recognize the issue. Get the facts. Know what went wrong and find out exactly how much this mistake is costing you. If possible, try to pinpoint where things began to go wrong.
- Know your options. You may already have contacts with a number of professionals, mentors or coaches who can help you find a solution to this problem and plot a course of correction. If you don’t know someone with specific expertise, ask your own circle of friends and relationships. Quite often, financial professionals in accounting, law, planning, and taxes have a network of other people they can recommend to you.
- Make a decision and move on. It’s tempting to play the “what if” game—considering different scenarios to determine which option may restore you back to full financial health. While it’s important to make the best choice you can, it’s also important not to waste too much time mulling a range of choices. At this point, don’t push for perfection—getting back on your feet should be your priority.
- Don’t worry about cutting losses. This is an important point, because none of us like to lose. It hurts to lose anything, and losing money can be especially painful. But it’s also important to recognize when your efforts aren’t helping you recover. Know when to throw in the towel and don’t be afraid to change course if your recovery plan is not working.
- Put a plan of action into place. Get specific on the details you need to get right. Then, map out the steps you need to take to make success happen. A written plan can help you visualize what you need to do and motivate you to get started.
- Execute your plan and monitor results. When you have your plan drawn up, don’t delay on putting it into action. The sooner you can start your plan, the sooner you’ll be back on the road to recovery. It’s also important to have checkpoints in your plan so you can measure your progress. Without these checkpoints, it may be difficult to see if you’re on the right track or if you need to adjust your plan.
This is not the be all end all list, but I do think it is a good starting point for when unexpected financial catastrophe hits. Following these steps will get you back on your feet before you know it.