5 Steps to Survive a Personal Financial Crisis

Updated on February 28, 2019

Many people go through a financial crisis at some point in their lives. It could be triggered by a medical emergency, a divorce, loss of job, economic recession, or a natural disaster. A financial crisis is one of the hardest things to deal with. It can emotionally and mentally torment you, and ultimately affect all other aspects of your life. And if you don’t survive, you could end up broke and homeless.

Recovering from a financial crisis can take some time but is definitely possible. Below are the crucial steps to take to survive a personal financial crisis.

1. Accept that you are undergoing a financial crisis.

Many people go through the financial crisis but don’t admit it (or could not). Rather, they deny the situation, which makes the problem even worse. The first and most important step towards surviving any kind of crisis is to accept the fact that it is happening to you. It will not only make you feel better. It will also empower you to face the difficulties and focus on resolving the problem. At this point, you should stop or avoid blaming yourself. You have to concentrate all your effort and energy looking for solutions.

2. Assess your financial situation.

It is important to understand where you are right now, in terms of your finances. What’s causing the problem? What are your options to resolve it? If you are feeling lost, consider seeking help from a professional financial consultant. This person will not just help you identify the problems that put you in this crisis and financial stress, but also teach you more productive ways to approach them.

3. Consider an alternative financing option.

Illness, medical emergency, natural disaster, unpaid mortgage – in most cases, to resolve these problems, you will be forced to borrow money. Your bank may be your number one option. However, personal loans don’t always get approved by traditional lenders and it usually takes time (even months) to process loan requests. This is where alternative financing options come in. For instance, you can get an online cash advance for emergency situations within 24 hours. Most alternative lenders don’t have very strict requirements unlike banks and they accommodate all types of borrowers, even those with low credit scores.

4. Create an additional source of income.

Now could be the perfect time to take another job or start a small business – anything that can help augment your income and survive the crisis. Maybe you have some personal stuff that you no longer use but are still in good condition that you may want to sell. Or maybe there’s a local fair in the neighborhood. You can sign up and sell some goodies. If you have special skills that you can capitalize on, such as web designing or writing, you can create a second stream of income. There are many ways to earn money. You just have to take time exploring your options.

5. Uncover the lesson.

Surviving the crisis is not the end of the story. It is equally important to unbox the lesson and learn from it. Take time to reflect on the financial crisis you went through. What were the causes? What can you do next time to prevent the crisis from happening again? How can you strengthen your finances? How do you boost your income moving forward?

Nearly every one of us experiences a financial crisis at one point or another. It can be difficult to deal with, but certainly not impossible. Hopefully, through these steps, you will not just be able to survive the crisis, but more importantly, strengthen your finances and overcome potential setbacks.