By Warren Ingram, CFP®
Life has a way of surprising you when you least expect it. As soon as you have organised your personal finances, something knocks your plans off course. As the great philosopher (and boxer) Mike Tyson once said, “Everyone has a plan until they get hit.” So, what do you do when your financial planning has not gone well? Is there a point where throwing in the towel is the only option? Absolutely not. Here are some pointers to help when your financial planning has hit a rough patch.
1. Identify the Reasons
First and foremost, it’s crucial to understand the root cause of your financial setback. Was it an unexpected expense that drained your savings? Did a sudden change in income catch you off guard? Perhaps poor budgeting led you astray, or you didn’t prioritise saving. Identifying the reasons for your financial woes is like finding the source of a water leak before you can fix it. It’s the foundation of your recovery. Once you understand what went wrong, you can take steps to address the issue.
2. Revisit Your Goals
Consider your current situation and take a few moments to reassess your financial goals. Are they still realistic, given your circumstances? Do they need to be adjusted or reprioritised? Clear, achievable goals are essential, but it is equally important to be flexible and adapt them as needed. By revisiting your goals, you can focus on what truly matters.
3. Stay Positive and Persistent
Setbacks are an inevitable part of life, but they should not derail your progress entirely. Stay positive and maintain a sense of persistence and determination in your efforts to improve your financial situation. Remember, financial freedom is built over time, so keep taking small steps towards your daily goals.
4. Explore Additional Income Sources
If your financial planning has gone awry due to a lack of income, consider exploring additional sources of revenue. This could mean starting a side hustle, freelancing, or working part-time. The gig economy offers many opportunities to supplement your income, and finding ways to increase your earnings can boost your financial situation. Older people who cannot get work in corporate can still use their time and experience to earn an income working for small businesses or by providing services to working people who have income but no spare time.
5. Emergency Fund
An emergency fund is one of the most critical components of any financial plan. If you don’t already have one, now is the time to start building it. An emergency fund serves as a safety net, providing a financial cushion to fall back on when unexpected expenses arise. Aim to save enough to cover at least three to six months’ worth of living expenses and replenish it regularly to ensure you’re adequately prepared for whatever life throws your way.
Encountering setbacks in your financial planning is not a sign of defeat but an opportunity to reassess, readjust, and come back stronger. So, dust yourself off, recalibrate your plan, and keep moving forward. Your financial future depends on it.
Written by Warren Ingram
CFP®, Wealth Manager, public speaker, and author. Host of the Honest Money podcast. FPI South Africa Financial Planner of the Year 2011.
