From Setback to Comeback: How to Overcome Financial Loss and Achieve Your Goals

We often don’t expect our plans to go astray but the reality is that they very often do, particularly when it comes to our finances. Whether it’s an unexpected job loss, illness, falling victim to a scam, relationship breakdown or simply falling off the financial wagon, it is safe to say that most Australians will experience financial loss at some point in their lives. In fact, a 2021 survey by the Financial Planning Association of Australia (FPA) found that nearly 1 in 5 Australians (19%) had experienced a financial setback in the previous 12 months. Not only do these events create financial hardship but they can also impact our mental wellbeing with feelings of stress, anxiety, and shame along with the potential to develop a negative self perception or the rise of relationship issues. It is therefore important to seek support and advice if you are experiencing financial difficulties so that you can make a swift and full recovery.

A financial loss can really pack a punch

Last week I received a text message from my Mum. ‘Hi Darling, I hope I put the right description in the transfer for you. Let me know when you get it xx’. It immediately set off an alarm bell. What was she on about? I rang her straight back, ‘Hi Mum, what are you talking about? What transfer?’. ‘The money you asked for.’ she replied and quickly followed on with ‘Oh no, I’ve been scammed’. My mum had fallen victim to the notorious ‘Hi Mum’ scam and lost $1800 in the process. Whilst my Mum shared that she felt embarrassed and annoyed by the experience, she is fortunate in that the loss is not one that will have a long term impact on her financial security. For many others, the impact of financial loss can be significant for both our long term wealth and financial security.

Here are some examples of financial losses that can really pack a financial and emotional punch:

1. Job Loss: Losing a job can result in the loss of income, benefits and stability, which can impact an individual’s financial security along with a disruption to our sense of purpose and identity;
2. Investment losses: Poor investments or market downturns can result loss of money which hinders our long term plans and our financial confidence;
3. Business failure: If a business fails, owners may experience financial losses related to loans, unpaid bills, or lost investment as well a feelings of shame and personal failure;
4. Medical expenses: Unexpected or high medical expenses such as specialist doctor visits, surgery or ongoing medical treatments, can result in financial strain.
5. Natural disasters: Natural disasters such as flood and fire can cause damage to homes, business and property, resulting in significant financial loss whilst the experience can cause stress, anxiety and feelings of helplessness.
6. Scams or fraud: Falling victim to scams or fraud can result in financial losses related to stolen credit card information, fraudulent investment schemes, or identity theft whilst the emotional fall out can include feelings of shame, stress and anxiety.
7. Divorce: Divorce or separation can result in the division of assets, legal fees, and ongoing expenses, which can result in financial losses for both parties. Research shows that women in particular face greater financial challenges following a divorce as they are more likely to experience a decrease in income and take on the responsibility of care for the children.

The fall out isn’t just financial

The emotional fall out of a financial loss can be just as devastating and protracted as the financial loss itself. Feelings of stress, anxiety, shame and grief may be felt intensely, especially if the loss was sudden, profound and unexpected. Managing these feelings on our own can be challenging so it’s important to acknowledge them and seek support. This may include talking to a trusted friend or family member, seeking help from a financial counsellor or therapist, or joining a support group for those experiencing financial difficulties. It is also important to give yourself time to work through these emotions, as this can help you to come to terms with the loss and move forward in a healthy and positive way.

From set back to bounce back: Here’s what you can do

Recovering from financial loss can be challenging, but there are steps you can take to help regain your financial footing. Here are some tips to help you recover from a financial loss:

• Create a budget: Make a budget to help you keep track of your income and expenses. This can help you re-prioritise your spending and make savvy savings to get ahead.
• Build an emergency fund: Set aside some money each month to build up an emergency fund. This can provide a safety net in case of future unexpected expenses or income loss.
• Seek professional advice: Consider speaking with a financial advisor or counsellor who can help you develop a plan for recovery and provide guidance on managing your finances.
• Take steps to improve your credit: If your credit has been impacted by the financial loss, take steps to improve it. This may include paying down debt, disputing errors on your credit report, and making payments on time.
• Hustle up some extra income: Consider taking on a side job or freelance work to supplement your income.
• Refresh your goals: Recalibrate your financial goals in light of your new reality. Ensure they’re specific, measurable and timely. Bonus points if you link them to an exciting and motivating ‘why’. From there you can develop a strategy to reach them.

You’ve got this

Finally, remember that recovering from financial loss can take time, so be patient and persistent in your efforts. Stay focused on your goals and continue to work towards improving your financial situation. 

Check out how to hustle up some extra income and start an emergency fund on ELLADEX app for a deeper dive on how to recover from financial loss.