Unfortunately, many Brazilians suffer from financial problems in their daily lives. 2019 ended with 63.84 million people facing default.
The consequences are diverse: loss of credit, budget tightening. And, of course, increased stress and worry.
Anyone who thinks that financial difficulties affect only those who earn little money or are out of control in their accounts is mistaken. In fact, anyone is exposed to unforeseen circumstances. The difference is in the way of dealing with them.
So, you want to know how you can prevent and solve financial problems in the right way? Check out our tips and ensure the balance of your budget even in difficult periods!
When do financial problems happen?
As we said, difficulties in financial life are not exclusive to people who have a lower income or do not control the budget. Even those who earn a good salary and live in blue can face a difficult time.
But why does this happen? It is important to keep in mind that spending less than you earn is not enough to achieve financial balance. This care is essential, but it alone cannot guarantee the health of your pocket.
The explanation is simple: unforeseen events can always happen. Not all expenses are scheduled. Thus, it is necessary to have availability to afford them.
Some examples are a last-minute trip to help a family member, extra health costs, corrective vehicle maintenance, etc.
In other words, making your monthly costs fit within the budget is just a step towards stability. In addition, it is also necessary to consider the unforeseen and remember that there is no right answer to the question “when financial problems happen”?
They can occur at any time. However, its effects are not the same for everyone. Those who are prepared are able to resolve unforeseen events more easily and calmly, without compromising the family’s livelihood or getting into debt.
How to deal with financial problems?
If you do not know when difficulties will arise, but you understand that you are always exposed to them, there is only one way: to prevent financial problems and prepare to deal with any of them.
Here are the best ways to do this.
Tracking your budget
There is no doubt: the leaner your budget, the better your ability to deal with problems. Imagine that someone has a salary of ten thousand reais, but usually spends only seven thousand.
This means that every month the person has three thousand reais left over. In other words, it has this safety margin to deal with unforeseen circumstances. Depending on the problem, it is possible to solve it only with the monthly budget, without messing with reserves or borrowing.
You may be wondering how to get a leaner budget. The way is to track your spending. Keep a record of your sources of income and your monthly costs in a spreadsheet or application and always try to keep limits on your accounts while saving.
The best strategy for dealing with financial problems is prevention. If there is money left in your account at the end of the month, there is the flexibility to make decisions. Those who spend almost all their wages are vulnerable, even in the face of small extra expenses.
Another possibility to be better prepared in the face of financial difficulties is to have some types of insurance – such as health insurance, insurance for your vehicle or property, etc.
An insurance contract works, basically, as a risk transfer. A car can be damaged in traffic accidents or stolen, right? When you take out insurance, you are passing the risk on to a company.
Therefore, the responsibility for repairing the car will be hers, in case something happens to him. The same goes for a property or for your health.
And why is it worth paying for insurance like that? The advantage is that the price of repairing the vehicle or even buying a new one after being stolen is much higher than the value of the insurance.
Expenses with consultations, exams, and hospitalizations in critical health moments can also exceed the monthly fee of your plan. Therefore, anyone who does not want to expose their finances to an imbalance in unforeseen circumstances should consider taking out insurance.
Having an emergency reserve
Insurance protects you against specific financial problems, such as illness or property damage. However, it is also necessary to think about a reserve of money that can be used in other situations.
For example, in a job loss or a significant decrease in income during a certain period. Things like that are big problems for many people. However, they need not always be.
Those who have an emergency reserve have more peace of mind to overcome situations of this type. The idea of the reserve is to add a sufficient amount to bring you stability even in unstable moments.
The advice is to save an amount for at least six months of your cost of living. You would certainly feel more confident if you had that money set aside, wouldn’t you? With it, it is much easier to face unforeseen events without losing security.
The aspects we have mentioned so far can be considered preventive elements of financial problems. Although they do happen, their effects will be much less for those who take such care.
However, there is also something to do when the negative consequences of the problems have already settled. For example, in the case of indebtedness and default. If you are experiencing the situation, the first step is to negotiate with the lender.
It is common for people to be afraid to face their debts head-on, but this is a big mistake. As long as there is no attempt to deal with reality, the problem is only complicated. After all, interest continually increases your outstanding balance.
It is best to calculate all the debt and negotiate the payment terms so that they fit in your pocket. Then, use the tips we gave you to control your budget and ensure the discharge of all installments.
Looking for ways to make extra income is another tip for dealing with financial problems that are already hurting you. The strategy of earning more allows for greater flexibility in spending and helps you regain stability quickly.
By following our guidelines you are sure to be ready to deal with financial problems in the right way.
Denying the possibility of unforeseen events is a mistake that no one should make. Adapt your finances to unpredictability and it will be easier to stay balanced!
Want help organizing your financial life? Discover the 50-30-20 method for assembling the household budget!