If there is one thing life isn’t, it’s stationary. Life is a dynamic, ever-changing experience that tosses amazing opportunities and events as well as painful tragedies and troubles at us throughout its entirety.
No matter how much life throws at us, we must bob, weave and work hard to control and contort our lives around those changes in order to make the best out of a bad, or better, situation.
If life lobs a financial curveball at you, whether good or bad, your best bet is to adjust to the change quickly. Here are some tips to help you when the time comes.
- Keep your debt to a minimum. When you create debt, you’re tying up future dollars for years—sometimes decades—just to get your hands on something you want today. If you can control the amount of debt you take on during the stable financial times, you can ensure that you have more flexibility to react during the bad financial times and a better opportunity to make positive use of your money during the good times.
- Have a back-up budget. You should have several different budgets that match various financial circumstances you might face in the future. That way, if you lose a job, take a pay cut, or have a sudden emergency that ties up your money, you have a roadmap for exactly how you need to react. This will not only take a lot of stress off your shoulders should a negative change occur, it will also allow you to adjust quickly.
- Accept the change immediately. If you try to deny that things are different, you will delay your reaction to the change and could find yourself in some major trouble as a result. What if you lose your job, but assume that you’ll get another one quickly and, as a result, keep spending the same way you always have? How quickly will you devastate your savings? And then what will you do? Let’s say that the major change is a positive one, such as winning a small jackpot or getting a big promotion and raise. If you don’t consider the fact that there has been a major financial shift in your life, you may not research investment options and tax issues and could lose some of the money that would have otherwise changed your life.
- Learn as much as you can. It sounds trite, but knowledge really is power. The more you know about the various facets of your situation—from how others have dealt with it and the kinds of decisions and factors that can impact it, to the many ways it can change your life—the quicker you’ll be able to adjust and the better the decisions you’ll make.
Although it might feel like the world is crashing down when financial tides turn for the worse or like you’re invincible when they improve, neither of those feelings is likely to be accurate. Rather than wallow in exaggerated feelings about your situation, take some time to determine the best course of action and minimize the potential for damage you could encounter.