How to Find Help When Your Finances Are Low

Financial difficulties are a universal challenge, striking regardless of background. Economic downturns, unexpected events, and even everyday living costs can leave you feeling overwhelmed and insecure. It’s important to remember you’re not alone.

There are resources, strategies, and a supportive community ready to help you regain control and build a secure future.

1. Take Stock and Breathe: Assess Your Situation

Before diving into solutions, take a deep breath and gather your financial bearings. This is like checking the map on a road trip – you need to know where you are before deciding where to go. Collect your recent bank statements, credit card bills, and any loan statements. Understanding your income, expenses, and debts is crucial for forming a plan.

• Income: List all your income sources, including salary, wages, side hustles, government benefits (unemployment, disability, etc.), or Social Security.
• Expenses: Categorize your spending – housing, utilities, groceries, transportation, debt payments, entertainment, etc. Be honest with yourself – are there areas to cut back on subscriptions, eating out, or impulse purchases?
• Debts: List all your debts, including the outstanding balance, interest rates, and minimum payments. Prioritize high-interest debts that are accumulating the most in charges.

2. Prioritize Needs vs. Wants: Differentiate Spending

Differentiate between essential needs and discretionary wants. Needs are things you can’t live comfortably without – housing, food, utilities, transportation (to work or essential errands). Wants are things you can live without, even if they’re desirable – entertainment, dining out, new clothes.

This doesn’t mean you can’t have any fun! Allocate a small, realistic amount in your budget for occasional wants to maintain a healthy balance.

3. Create a Budget: Take Control of Your Money

Budgeting is the cornerstone of effective financial management. Here’s how to create a realistic budget:

• Choose a budgeting method: There are various methods – 50/30/20 rule (50% needs, 30% wants, 20% savings/debt repayment), zero-based budgeting (every dollar allocated), or envelope budgeting (using cash for specific categories). Pick one that suits your learning style and personality.
• Track your income and expenses: Use a budgeting app, spreadsheet, or a simple notebook to track your income and expenses for a month. Many banks offer free budgeting tools and online resources are available. This will reveal spending patterns and potential areas for adjustment.
• Set realistic goals: Don’t try to drastically change your spending overnight. Start small and gradually adjust your budget. Celebrate your achievements! Reducing eating out by once a week or lowering the cable TV bill by finding a cheaper package are achievable goals that lead to long-term success.

4. Explore Debt Relief Options: Tackle the Burden

High-interest debt can be a major burden, like a heavy backpack hindering your progress. Explore ways to manage or eliminate it:

• Debt consolidation: Consolidate multiple debts into one loan with a lower interest rate. This simplifies payments and potentially saves money on interest. Research and compare loan options from different lenders before committing.
• Balance transfer credit cards: Transfer high-interest debt to a card with a 0% introductory APR. This allows you to pay down the principal without accruing extra interest during the introductory period. However, be mindful of fees and ensure you pay off the balance before the introductory period ends.
• Debt management plan: Enroll in a program where a credit counseling agency negotiates with creditors to lower your interest rates and create a manageable repayment plan. There might be a small fee associated with this service, but it can save you money in the long run.
• Bankruptcy: This is a last resort and should be explored with a qualified bankruptcy attorney. There are different chapters of bankruptcy, each with its own implications and consequences.

5. Seek Professional Guidance: Experts Can Help

Consulting with a financial professional can provide valuable insights, personalized strategies, and a sense of security:

• Financial advisors: These advisors assess your financial situation, risk tolerance, and goals to recommend investment options, retirement planning strategies, and insurance needs. Some charge hourly fees, while others work on commission by selling financial products. Ask questions about their fees and any potential conflicts of interest before engaging their services.
• Credit counselors: These non-profit organizations offer free or low-cost credit counseling and debt management plans. They can help you negotiate with creditors and develop a plan to become debt-free. Search for reputable organizations certified by the National Foundation for Credit Counseling.
• Bankruptcy attorneys: These legal professionals specialize in bankruptcy law and can guide you through the process should that be the best course of action. They can explain the different chapters of bankruptcy, the eligibility requirements, and the potential impact on your credit score and future financial opportunities.

6. Government and Non-Profit Assistance Programs: Utilize Available Resources

Don’t hesitate to utilize government and non-profit resources designed to assist individuals and families during difficult times. These programs can provide a safety net and a much-needed boost:

• Needs-based programs: Many programs offer assistance with basic necessities. Programs like SNAP (Supplemental Nutrition Assistance Program) can help with groceries, while LIHEAP (Low Income Home Energy Assistance Program) can provide assistance with utility bills. Research what programs are available in your area and eligibility requirements.
• Housing assistance: Programs like Section 8 housing vouchers provide rental assistance for low-income individuals and families. Contact your local housing authority to inquire about eligibility and waitlist times.
• Healthcare assistance: Programs like Medicaid provide health insurance for low-income individuals and families. This can help alleviate the burden of medical bills, especially during times of financial hardship.
• Education and training programs: Government and non-profit organizations may offer job training programs or educational assistance to help you acquire new skills or certifications that can increase your earning potential.

7. Boost Your Income: Explore Additional Earning Streams

Consider ways to increase your income and improve your financial standing:

• Freelancing or side hustles: Offer your skills and expertise on freelance platforms like Upwork or Fiverr. Explore online marketplaces like Etsy to sell handmade crafts or unique items. If you have a knack for writing, editing, or graphic design, you can find freelance work online. Consider offering services like pet sitting, dog walking, or house cleaning in your local community.
• Part-time job: Taking on a part-time job can provide a steady stream of additional income. Consider your skills and interests – retail, customer service, administrative work, or hospitality might be options.
• Gig economy: The gig economy offers flexible work opportunities through platforms like Uber, Lyft, or DoorDash. These can be a good way to earn extra cash on your own schedule. However, remember to factor in car expenses and taxes when considering this option.
• Sell unused items: Do you have clothes, furniture, or electronics you no longer use? Declutter your home and earn some extra cash by selling them online through platforms like Craigslist, Facebook Marketplace, or specialized online marketplaces. You can also host a garage sale to get rid of unwanted items.

8. Communication is Key: Talk to Creditors and Loved Ones

Open communication is crucial during financial difficulties:

• Creditors: Contact your creditors and explain your situation. Many lenders are willing to work out payment plans or hardship programs if you proactively reach out. Be honest and upfront about your challenges and propose a realistic repayment plan.
• Loved Ones: Don’t be afraid to confide in trusted friends or family members. They can offer emotional support and may even be able to provide some temporary financial assistance.

9. Focus on Mental Wellbeing: Take Care of Yourself

Financial stress can take a toll on your mental and emotional well-being. It’s important to take care of yourself during challenging times:

• Maintain a healthy lifestyle: Eat nutritious meals, exercise regularly, and get enough sleep. Taking care of your physical health will improve your energy levels and overall wellbeing, allowing you to better manage your financial situation.
• Develop coping mechanisms: Find healthy ways to manage stress, such as meditation, yoga, or spending time in nature. Talking to a therapist can also be beneficial to develop coping skills and emotional resilience.
• Maintain a positive attitude: Financial difficulties can feel overwhelming, but try to stay positive and focused on solutions. Celebrate small wins and milestones on your journey to financial stability.

10. Knowledge is Power: Educate Yourself

Financial literacy empowers you to make informed decisions about your money. Here are some resources to get you started:

• Free online resources: The National Foundation for Credit Counseling (https://www.nfcc.org/) offers free educational resources on budgeting, debt management, and credit repair. Many government agencies also offer financial literacy resources online.
• Books and podcasts: Several books and podcasts provide valuable insights on personal finance. Explore resources that resonate with your learning style and interests.

Remember, you’re not alone in this journey. By taking control of your finances, seeking professional guidance, and utilizing available resources, you can overcome financial challenges and build a secure future.