Figuring out how to start over financially after a setback can be one of the most challenging experiences of your life.
Starting over financially at 30, 40, 50, or any age is going to feel daunting. But with a clear GAME plan, you can rebuild your life and finances. Get clear on your goals. Start taking action. Understand and manage your finances and review and revise as you go.
It takes courage to start over financially and rebuild your finances. Most people who find themselves in this unfortunate circumstance worry that they will never regain control of their finances again. They think their credit score is forever ruined, their savings account dissolved, and their future prospects bleak.
But there is light at the end of the tunnel. You just need to know what to do next so you can get back on track in no time.
So read on for some useful advice on how to start over financially.
Where to start: Create your GAME Plan
If you find yourself in a situation where you need to start over financially, the first thing you need to do is take an honest assessment of your situation.
Some areas you may need to focus on include paying down debt, rebuilding your credit score, saving up for an emergency fund, or getting a higher-paying job.
Once you’ve determined the areas where you need help, follow the tips below to get started.
What does a good life look like from here?
Goals: Understanding your health, wealth, and happiness goals will give you a target to aim for.
Actions: What actions will you need to take to rebuild your finances and life? Get up or go to bed earlier. Read a book or get some coaching on how to save and invest for your future. Use your skills and experience to start a side hustle.
Means: Where will the money come to reach your goals or will you need to create new sources of income- will it come from earned income, investments, or side hustles? And how will you go about managing this money to maintain and grow it?
Execution: Start implementing your plan reviewing and revising as you go along.
Know Your numbers
The first step in any financial plan is to know your numbers.
In other words, you need to understand your current situation so you can identify what you need to do next.
This way, you can avoid making costly mistakes that will only set you back even further.
- What is your current financial situation?
- What is your current debt?
- What are your long-term financial goals?
- How much do you currently make?
- What are your current assets tangible (things) and intangible (experience and skills)?
These are just a few of the questions you will want to ask yourself to get a clear idea of where you stand financially.
Once you know where you’re at, you can decide what options are best for you moving forward.
How to get out of debt
If you have a lot of expensive debt getting out of it or at least easing the pressure will be a good move.
There are lots of ways to do this, but keep in mind that if you try to pay off your debt all at once, you will probably just get frustrated and give up.
The best way to get out of debt is to use a debt repayment plan.
2 common methods are the debt avalanche and the debt snowball methods.
The debt snowball involves taking your smallest debt first and throwing everything at it until it is paid off (making sure that you make the minimum payments on all your debts though)
The debt avalanche involved going after your most expensive debt first and throwing everything at this before moving on to the next most expensive. Make sure you are making minimum payments on any other debts.
You may also want to consider refinancing one or more of your debts to take advantage of lower interest rates.
Once you have paid off all of your high-interest debts, you can start saving again and working toward your long-term financial goals.
How to rebuild your savings
Once you get your debt under control, you can start rebuilding your savings.
Save first and spend what’s left, the other way around will always see you finding ways to spend all your money.
If you don’t have an emergency fund, now is a good time to start one. Keep at least 3-6 months of living expenses in a savings account, so you can cover unexpected expenses without going into debt.
Automating your savings process is often the easiest way to start saving.
Set up your automation to save first and then live off what’s left. Not the other way around as you will always find a way to spend all your money and forget about saving.
Rebuild your credit
If your credit score took a hit during your financial setback, this is a good time to start rebuilding your credit score.
The best way to do this is to get yourself out of debt and start saving again.
You can also follow these 3 easy tips to improve your credit score.
- Sign up for one of the free credit score agency apps – review what’s on there to make sure it’s all correct. From here you can also track your progress.
- Start paying off your debts using the snowball or avalanche methods
- Choose a credit card with no annual fee. Keep your credit card balances low. Pay your credit card bill in full every month.
These three tips alone can have a significant impact on your credit score if you follow them consistently.
Once you have your credit score back on track, it will open up the ability to borrow money carefully and sensibly for more expensive things like a house.
Finding a Job and Earning More Money
If you are out of work and need to start over financially, this is the perfect opportunity to network and start applying for jobs.
There are lots of ways to find work, and you don’t have to sit around waiting for an employer to find you.
Here are a few tips to get you started:
Start networking – Connect with people in your field and look for leads on new jobs. Put yourself out there – Attend job fairs, networking events, and informational interviews.
Find a side hustle – This can be anything from driving for Lyft to selling stuff on eBay. You never know what opportunities might come your way. If you find a full-time job, make sure to negotiate your salary. You can also look for ways to earn extra money on the side to help with extra expenses.
Start investing in assets
The best way to increase your wealth is to create assets that enable you to build a financial future.
Assets are things that provide you with a rising income and go up in value over time – everything else is not an asset but a liability.
The 3 most common assets include
Property: rental properties provide a monthly income as well as the house, garage, or apartment going up in value over time.
Stocks: Investing in the great companies of the world through low cost globally diversified income has always been a way to build wealth over the long term.
Businesses: Starting or investing in a business is another great way to build wealth as it should provide you with an income and rise in value over time as you grow your profits and business assets.
FAQ: How to start over financially
How do you financially restart?
Set some clear goals for what good looks like from here including health, wealth, and happiness goals. Get clear on your numbers, savings, income, expenditure, and debts. Start tracking them to make sure they are going in the right direction. Stop the past bad financial habits and start new good ones like saving first and spending what’s left.
How do I start over after financial ruin?
Set some clear goals for what good looks like from here, thinking about health, wealth, and happiness. Review those habits that got you here. Resolve to start and increase good financial habits like saving, spending less, tracking your numbers, and building your financial education.
How do I move on and start a new life with no money?
Moving on when you are broke is going to require you to set a new course. Set some clear life goals, and be clear on the actions it’s going to take to get closer to those goals. Understand where the money is going to come from and if you will need to create it using your skills and experience. Track your numbers to understand where you are starting from and any progress being made.
How do I start from scratch after losing everything?
If you lose everything you are going to need to get a plan together to rebuild your health, wealth, and happiness foundations. Write down what good looks like from here in every area of your life. Take the actions needed on each of those goals. Figure out where the funds for a restart will come from. Execute your plan review and revise as you go.
Conclusion: Starting over financially
Life is full of unexpected challenges, but you can overcome them if you have a plan.
If you find yourself in a situation where you need to start over financially, follow the above tips and you will be on your way to regaining financial stability in no time.
Remember, you are the one who controls your financial future.
And if you would like any help just set up an appointment.