Going through a financial crisis is something nobody wishes for. However almost everyone will experience it at some point in their lives. With a pandemic and recession hitting the world, plenty of people are facing financial difficulties and job insecurity. Here are the 4 signs you’re headed to a financial crisis.
Protect yourself and your loved ones by keeping the following warning signs (and the steps to mitigate them) in mind.
What are the 4 signs you’re headed to a financial crisis?
1. Your credit cards are getting too much of a workout.
Putting an invoice on credit once or twice to avoid late fees or services being disconnected can be a relief. However, if this starts to become a frequent payment option, you run the risk of getting out of control.
If borrowing money from a partner or someone close to you is not an option, seek debt help and support from reputable not-for-profit lenders. These services offer immediate support at lower interest rates. They also provide longer-term financial counseling to equip you with the tools needed to extricate yourself from your money troubles.
2. You are not paying your bills on time.
The occasional delay is nothing major, but if you can’t recall the last time you paid a bill on time, it may be a sign of trouble. Late bill payments can incur extra fees, and over time, this bad habit starts to affect your credit score. That’s on top of the risk of eventually having your services cut off from your biller. If the bills you’re struggling to pay on time include your internet connection or utilities, being cut off is a serious matter.
What’s important for you to know here is that ignoring the matter won’t help. If your billers don’t know you’re in financial strife, they have no way of offering you any leniency. However, if you talk to them, you may be able to arrange payment plans and flexible conditions. You’ll most likely be pleasantly surprised by how accommodating they are.
3. You don’t have an emergency fund.
No one is immune to emergencies. That’s why having emergency savings is vital for staying afloat. This is how people survive situations like job losses and unanticipated expenses.
If you have found yourself in an urgent situation that has drained your main bank account or plunged you into debt, you may not have the ability right now to start building an emergency fund. If this is the case, reach out to your support network and start researching grants and relief programs. Once again, you may find yourself pleasantly surprised at what you’re eligible to receive.
4. You catch yourself telling lies.
It may feel more optimistic to say “I’m okay,” or “I’ll be able to pay that back later.” However, if you’ve related to the points listed above and you’re still insisting everything is fine, you need to face the fact that you are downplaying the severity of your situation.
This could be due to stress or shame because although it happens to the best of us, nobody wants to believe that they’ve fallen into trouble. At this point, you’ve gone beyond little white lies. Your insistence that everything is fine will only delay your ability to overcome your situation. You are deserving of help, and you can get through this, so don’t be ashamed to reach out for support.
Are You Headed to a Financial Crisis?
If you or somebody you care about is on the brink of a financial crisis, know that there is hope. Follow through with the above tips and don’t hesitate to talk to your loved ones or your GP when feeling overwhelmed.
For more articles similar to this one discussing 4 signs you’re headed to a financial crisis, visit the financial planning section of the blog.