As a life coach Sue Plumtree has all kinds of people coming to her for help. But lately many people are coming to her with financial difficulties, which happen to be her area of expertise. She lets us know what to do when a financial crisis hits home.
A client might have heard rumours of redundancy and scared themselves into a standstill, unable to think. They’re likely to be in their late forties or early fifties – a difficult age when you’re about to lose your job. Whether we like it or not, we live in an ageist society.
The first thing I advise my clients to do is to talk with their partner about what’s going on. You’re in this together. My client’s redundancy is not a personal tragedy; it affects the family and needs to be dealt with as such.
This is not the time to bury your head in the sand. It may be a cliché, but seems to be the most common response in times of crisis. Nowadays, any kind of financial crisis tends to happen with increasing frequency.
Practical steps need to be taken for various reasons. Not knowing where you stand is particularly scary. Here it’s easy to imagine the worst-case scenario. You can’t move in any direction until you know what the situation actually is.
Taking panicked action is even worse. Some people turn to moneylenders as a first resort. Even those who are still employed but find it hard to make ends meet turn to payday lenders. The Independent on Sunday reported in June that, “One million families are being forced to take out payday loans every month…” and “Half of the people who take out payday loans find they can’t cover the cost of repayment – which can attract interest rates of more than 5,000 per cent – which means they are forced to take out new credit and spiral further into debt.”
There are much better steps you can take. Taking action, however small, can shake off this feeling of helplessness and despair that can grab you by the throat.
Knowing where you stand makes a huge difference because, until then, you can’t know what choices and decisions to make.
Some people choose to deal with the situation on their own, even though they have a partner. This is a very poor idea for a number of reasons.
Firstly, it can drive a wedge between the two of you, and your partner will have no idea what’s going on. Your intention may have been to protect them but it will only damage your relationship because there will be a wall between you.
The other reason is that your partner could actually help. You’re stronger together.
Finally, this could actually be a huge opportunity to change direction, to figure out what you would really like to do.
Whatever route you decide to take, take it with full awareness and ask yourself what the advantages and disadvantages are to ensure it’s the best choice for you as a family.
Steps to take control of your financial crisis:
Gather information. If you are in a potential redundancy situation, you need to know what your rights are.
Find out what benefits you’re entitled to. You can find out this information online but it’s probably better to contact the Citizens Advice Bureau because they can advise you based on your personal situation.
Contact an independent financial adviser for options.
Prepare a budget. This is such a common sense thing to do you’d think everybody has one, but that’s not the case, so it bears repeating. Keep a record of your own and everybody else’s expenses. Even small things add up and, before you know it, figures that seemed small in the beginning become significant.
Calculate the gap between your income (excluding your salary) and your outgoings. What can you cut? You will be surprised how many things you can easily do without. A lot of spending is automatic, money we spend without wondering if we really need – whatever it is.