Whether it’s a job loss, a significant decline on your investments, or a large, unexpected expense, everyone faces financial setbacks. If it happens to you, saving money may be the last thing on your mind. These 4 steps can help get you back on track — and back to saving money — more quickly.
4 steps to get back on track
1. Look at your current finances
Look at what you own and what you owe. Are you behind on paying your bills? Do you have a lot of high-interest debtDebt Money that you have borrowed. You must repay the loan, with interest, by a set date.+ read full definition? Do you have enough savings to get you through this financial setback? If you need help figuring things out, consider professional advice.
2. Review your financial goals
Think about what you would like to do in 1 year, 5 years, 10 years or more. Try to be a specific as possible. When you’re facing a setback, some of your financial goals may have to change. Still, it will be easier to get your finances back on track when you know what you’re saving for.
Use this financial goals worksheet to help you sort out your goals.
3. Review your budget
Just as you’ll want to revisit your financial goals, you’ll want to revisit your budgetBudget A monthly or yearly estimated plan for spending and saving. You work it out based on your income and expenses.+ read full definition too. Having a realistic budget and sticking to it will help you get back on track.
Use this worksheet to record your budget.
4. Review your retirement plan
Depending on your age, you may have time to make up any losses that could affect your retirement plan. If you’re in your 50s or 60s, you may face some difficult choices, including:
- working longer, so you’ll have more time to save and more time for your investments to recover,
- cutting back your spending, so you can save more in the years leading up to retirement, or
- retiring as planned and learning to live on less.
Use this calculator to see how even small amounts of money saved add up over time.