7 Ways to Cope With a Financial Loss

“Failure is a teacher; a harsh one, but the best” – Thomas J. Watson

Life is a continuous journey where we keep trying to put our best foot forward. Sometimes even the most well-intentioned well-researched actions do not produce the desired results, even in our financial lives. A financial loss like an investment decision gone wrong or a business loss can strike us hard and it can seem like life will never be the same again. However, looking at the bigger picture and taking one step at a time, coping with a financial loss can really happen and heal the wounds with time.

1. Do not take any impulsive action  

cope financial loss

It is only human to sometimes give in to your emotions and resort to impulsive actions be it run through all your savings, withdraw all possible investments or mortgage remaining assets. In this scenario, when you have already lost a big amount of money, that’s not an advisable thing to do.

Know that it is not a good idea to take action in the heat of the moment. Just taking the time to cool your horses, letting things and swirling emotions settle in your head will help you take better long-term decisions.

2. Consider taking professional help with emotional support

cope financial loss

Sometimes, it is difficult for us to process our thoughts in case of life’s unexpected twists and turns. While we might think, financial losses are all about rationality and can be resolved using only the head, sometimes our mind and heart needs help. Meeting a therapist is no longer taboo and it can help you to figure out your own coping mechanism of dealing with the loss and also to put the course correction plan into action.

If the idea of a therapist seems intimidating, consider talking to a family member or a friend to whom you can open up without any shame or embarrassment. Today, money depression is actually a concept and this U.S. News article has some more handy tips to deal with it.

3. Assess the situation

cope financial loss

Take stock of the situation in a rational manner – assess the magnitude of the loss, understand what it would take to rebuild, plan for the rebuilding stage and strategically go about it. Often the situation is not as bad as we make it out to be initially.

Try and look at the situation in totality to make sure you have all your facts in place. This would make a good starting point for the rebuilding process.

4. Cut back on your expenses for some time

cope financial loss

Rebuilding after a financial loss requires you to fill the gap left behind. This gap can be filled in two ways – increasing the cash inflow and reducing the cash outflow. Track your expenses and find small yet impactful areas to cut down your spending. This could be eating out or entertainment or even smaller expenses like Cable TV. Know that it is a short term measure and once your financial situation stabilizes, you can go back to integrating your preferred spends back in your life.

If you are still pondering on where or how you could save money, this list is great for starters.

5. Increase sources of income

cope financial loss

Now that you have a rebuilding strategy or vision in place, you have some idea of what efforts or monetary inputs would be needed to close on the gap left by your financial loss. If you think your current income does not suffice, consider increasing your sources of income. Most successful people have and also advocate building on multiple sources of income to reduce risk at all levels.

Today, with the Internet, there are various ways that you could end up earning money on the side, popularly known as a side hustle.  Check out this post from Side Hustle Nation and this one from Money Peach to get you started on side hustle ideas to help you earn additional income.

6. Take measures to avoid similar losses in future

cope financial loss

Each failure, when seen through the right lens, is a great teacher and a stepping stone to greater success. However, that involves certain analyses. Once you can distance your emotions from the situation, it is important to look at what happened through a microscopic lens.

Was it an investment that went south ward? Was it inherently risky or was it well within your personal risk appetite? Did an asset become a victim to an unforeseen tragedy, for instance a factory fire? Could a good insurance cover have reduced the extent of losses that you faced in such an instance?

Methodically, go through the situation in hindsight and take measures that you might need to in order to not have to go through those again. If need be, talk to a financial planner or advisor for help to do this.

7.  Take a Personal Loan

cope financial loss

Sometimes a financial loss can be crippling in it’s magnitude and leave us with problems of dealing with financial expenses even in our day-to-day lives. In that case, it is okay to take a short-term small Personal Loan to tide over the situation.

However, ensure that you take the loan only in case of the situation being unresolvable as the temptation to take a personal loan can be immense, but in the long term it could also magnify the problem by adding on an EMI.

You can get quick and easy, collateral-free Personal loan with Money View. The loans are disbursed quickly on approval.

Nothing in life is insurmountable. When looked at in cool rational manner, the biggest problems including financial loss can be resolved. Have you ever faced a big financial loss? How did you cope in it’s aftermath? Let us know in the comments below.

Aparna Aggarwal

A Certified Financial Planner, Aparna is passionate about writing fun, relatable yet financially enlightening content. She blogs extensively at elementummoney.com .

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