Financial crossroads are those money moments in life where we have a big decision to make, or a challenge to overcome. Knowing how to deal with these crossroads effectively is important if we are to build and maintain financial stability and move ahead with confidence.
Some examples of the key life events that represent our financial crossroads are buying a home, starting a family, changing careers, or dealing with our debt. Others include planning for retirement, paying off HECS debt, or saving for a major purchase. Importantly, even though these matters can seem challenging, they all contain a positive aspect that we can tap into in order to guide and support our progress.
Beyond challenging situations, we also need to be ready for the everyday financial situations such as creating a budget, reducing unnecessary expenses, quickly repaying debt, saving for emergencies, and negotiating a lower interest rate on our home loan.
Getting through the challenges
Dealing with those financial challenges we’d rather not run into, will require us to keeping going even though it is tough, and be flexible in our approach.
Understanding the importance of resilience and creative problem-solving can be empowering. No doubt there are others who have faced this same situation and made it through – you can too.
The best steps that you can take today to be ready for the unexpected are building your emergency savings, continually working to a budget (even when things are going well) and acquiring new skills to boost your earning potential and value as an employee. This approach will ensure you’re able to deal with any financial issues that arise.
Practical solutions
Start by breaking down your financial goals into simple, actionable steps. You’ll want to get on track and stay there, so prioritise your goals based on what’s most urgent and important to you. I’d recommend starting with a goal of strengthening your financial foundations. This includes: (i) Saving your first $1,000 buffer, (ii) repaying all your non-housing debts by attacking them from smallest to largest, and (iii) exploring new ways to boost your income, like extra hours or a side hustle. Keep in mind that building and maintaining momentum are critical, so set small milestones and celebrate your progress along the way.
Gather your supporters
Surround yourself with a supportive community of friends, family, and mentors who can provide encouragement, insight, and accountability.
Keep learning too by actively seeking out financial education resources, workshops, or support groups in the community or online. Connecting with people who share similar financial goals and challenges provides mutual support and lets you know that you’re not in this alone.
Take proactive steps to address any current financial challenges while preparing for the next set of financial crossroads you’ll reach.
