Money management after a financial setback
Many people have experienced financial difficulty at some point in their lives. While it can be stressful, there are ways to put this time behind you – all it takes is a bit of planning and discipline. Get started with these 6 easy steps.
May 2021 – 3 minute read
Key takeaways from this article:
- Maintain a positive mindset
- Take stock of your financial situation
- Seek assistance
- Consider borrowing as a last resort
- Make a plan
- Take care of yourself
- We’re here to help
1. Maintain a positive mindset
It’s not unusual to be in this situation, and the first step is to look after yourself. Worrying about your finances is a normal reaction, but you’ll be better suited to tackling these challenges if you can maintain a positive mindset and your wellbeing. It helps to make sure you’re getting regular sleep and exercise. If you would like to speak to someone about any anxiety or depression that you may be experiencing, reach out to Beyond Blue, or consult your GP.
2. Take stock of your financial situation
Every dollar counts when you’re experiencing financial issues. So it’s vital to know where those dollars are going.
It’s important that you take a look at your bank statements to understand your expenses. Keep in mind, you aren’t doing this to judge yourself, it’s simply to identify what your spending habits are.
Review your expenses and consider what’s essential to you. Pinpoint problem spending areas that are costing you more than you can afford – these areas are sometimes due to excessive spending on fashion, dining, gaming, or nights out. This doesn’t mean you have to stop spending on these altogether but assess whether you need to find different ways to pursue your hobbies.
This analysis of your financial situation will be the blueprint to get you back on track. For more help on ‘taking stock’, read this article from the Davidson Institute.
3. Seek assistance
If you’re struggling to make certain necessary payments, like rental or loan payments, utility bills or internet bills, there is often help available.
Firstly, check if you’re eligible for any government work and financial support. It’s also worth checking with your local state or territory government to see if there is further support available.
If you need to, many utility providers will provide support or extensions to help you through this period. See the Australian Energy Regulator for information about energy bills. You can also contact your other utility providers and ask if they have any support or extensions.
If you currently have a loan with Westpac, see our range of financial support initiatives to see if we can help.
4. Consider borrowing as a last resort
Credit cards are a useful addition to your wallet as long as they’re treated with respect. Be sure that if you do decide on a card you understand what you’re signing up for. You can see our range of credit cards here and if you have any questions, remember we’re here to help.
If you’re considering using a personal loan to help you out of recovery, you need to exhaust all other options first. Speak with a friendly Westpac banker for general advice about taking out a personal loan or getting a credit card.
5. Make a plan
Making a plan for managing your money will help you to monitor and take control of your finances.
Your budget doesn’t need to be complicated. Some people find that this simple formula works for them.
- 50% for needs (debt repayment, etc)
- 30% for wants (clothes, entertainment, etc)
- 20% for savings
Try allocating your spending into these categories and regularly monitor that you’re keeping on track. If you’re finding that your wants are affecting your ability to save, it might help to reduce your lifestyle spending. Consider preparing food at home, cancelling unused subscriptions and reducing your utility usage, if possible. You might be surprised at the difference these small savings can make.
6. Take care of yourself
As you work towards your financial recovery, you may face some tough financial decisions. It’s okay to feel unsure or hesitant for a while. The important thing is to support your mental and physical wellbeing. Establishing a routine and ensuring sufficient exercise, regular sleep, and a healthy diet will help you to maintain a positive mindset to achieve your goals. If you’re experiencing high levels of stress, anxiety or depression, don’t hesitate to talk to someone. There are many people willing to help you.
As you move ahead to financial recovery, keep track of your progress and give yourself a pat on the back as you reach milestones. Taking control of your personal finances can be a rewarding and gratifying experience, and you’ve already taken the first step.
We’re here to help
We’re here to help. For more information on the ways we can help you, visit our financial recovery hub.
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Things you should know
This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice.
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