One of the most difficult things you have to deal with is navigating the emotional and mental roller coaster of any loss – and financial losses aren’t an exception.
Financial loss such as a job loss, the sudden demise of the breadwinner, business closure, being conned, or even physically losing money is a hard blow.
The good news is, that there are ways to keep your chin up and steadily recover from financial losses.
If you’ve ever heard of the stages of grief you know the first stage is denial, the final stage is acceptance, and yes, it applies here too.
The reasonable first step is to accept your financial loss. Do not be dismissive or downplay your loss. This will only give way to more money problems. For example, if you bet Ksh10,000 but fail to win the jackpot, don’t assume that betting more will guarantee a higher likelihood of winning. That’s denial.
So accept the reasons and consequences of the loss, and get started on the right track without devaluing your self-worth.
Here’s how - first, and in detail, indicate how much you’ve lost and the causes leading up to your financial loss.
Secondly, read what you’ve jotted down and candidly indicate your role in the financial loss.
To illustrate, say, you lose Ksh10,000 to an investment buy-in to a chama you heard people talk about. You’ll probably note that your ignorance played a role in the loss. By accepting this, it’s easier to note and follow through on the solution by cultivating the habit of doing extensive research and verifying information sources, from institutions like banks and finance counselors before making any investment.
Think of the person or people you know you can lean on and trust to be your support system. When you're down, this friendly, neutral option doesn't take any more from you.
That means you can rely on close friends and family to brighten your spirits and help you get through the pain of a financial setback while remaining honest and cautious to maintain your sense of self.
Remember that it is your responsibility to communicate, pay attention, and make the commitment to regaining financial control.
If you don't have anyone on whom you can rely, or if you prefer to keep your financial condition private, consider obtaining professional counselling. This will offer you objective support to help you manage and recover.
Don’t react. Respond. That means taking time to cool off, so as not to make emotional decisions but to focus on making logical, practical long-term choices.
Keeping your emotions out of any decision-making process is universally acknowledged as the best method to make sound decisions.
To do so, start by taking time to understand and accept the consequences of the financial loss. Hocking possessions, having to take on new ways to earn more, limiting activities you enjoy, and so on are good places to start from.
Next, don’t procrastinate but pace yourself when tackling each financial loss. Learn from your mistakes and aim to exercise caution in everything, not just in financial matters.
Getting your finances back in order after a financial loss may often mean reducing expenses and working to increase your income.
Not spending on take-out, downgrading your home internet plan or data bundle, and waking up earlier to board matatus before peak hours when the fare is low are all examples.
As pointed out earlier, thoroughly consider your finances before making any lifestyle changes. Ask yourself, “what do I need more of, less of, and what remains as is without compromising my or my family’s quality of life?”
Bear in mind that,
“What we hope ever to do with ease, we must first learn to do with diligence” - Samuel Johnson
Did you trust too quickly? Were you unaware of practices and services that provide financial protection? Maybe you did everything correctly, but the results are either non-existent or far too low.
Learn from your mistakes by taking stock of your financial situation.
Once you’re back on your feet and are coping much better; you become more self-aware of your behavioural patterns and triggers that affect your decision-making. Take for instance, do you value appearances more than being practical about what you can and cannot afford? If yes, recall the consequences of keeping up appearances, like constantly being broke, and appreciate the lessons of delayed gratification, as a resolution.
Essentially, be methodical about your plans to recover from a financial loss and consider working with a financial expert to help you do so.
Read Also: How to Protect Yourself From Loss of Income
There’s a lesson in everything.
As a result, remember that when dealing with financial loss, it's just as important to maximise what you have while working to replace or recoup what you lost.