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Personal financial crisis management

Updated on September 13, 2015

What should you do when you start facing financial crisis?

As global economy face uncertainties, many individuals are starting the pinch of their financial situations. Their income decreases, living standard becomes more expensive, debt to the bank increases up to the point where it is difficult to settle with the bank, and lifestyle is restricted for lack of financial needs. If the situation goes even critical, the individual may force into bankruptcy which can have consequences for his financial situation, employment, business ownership, and freedom of travel later. Before an individual enters into bankrupt state, it is important for them to realize quickly that they are in financial dire straits and something must be done. Here are some tips to follow when you realize you are in dire financial state in short term:

Income management

It is important to know where most of your income comes from, i.e. wages, investment profit, bonus, allowance. Calculate and monitor those income sources constantly and ask yourself. Do I earn enough for this month? Could my income amount be increased by any means? What should I do if either of the income sources suddenly gone? Knowing your income flow can essentially determine partially on your current financial situation. When you are in financial crisis, those questions have to be properly answered to ensure a sufficient financial sources.


Austerity means all means to reduce spending and reduce debt. It is probably the most important part in managing your income carefully when you’re in financial crisis. The easiest way to do is – reduce unnecessary spending, prioritize necessities more than luxury with budget cut, pay back the most important payment first such as utility bills and loan (reasons will be discussed later on debt restructuring segment), put more excess money into savings immediately, grow your own crops for food, implement more utility savings measure. It can be painful in the process but if managed well, it can ensures more economical spending and become a model for future financial management later.

Debt restructuring

Debt restructuring generally means effort to reduce debt burden for an individual in a particular month. This is normally done by extends the loan repayment period, delay the payment by informing the bank (this solution only works for few months), and prioritize payment on important debt such as utility bills and long-delayed indebted loan repayment (crucial to repay immediately before an individual is declared bankrupt). All these measures can help partially to reduce financial burden but only in short term, so it is important for an individual to find better means of earning job urgently before an individual becoming less creditworthy later and subsequently bankruptcy.

Additional income sources

Once you realize that you not earning enough, or lost some of your income sources, or worst become unemployed, that is the time to start exploring other means to earn additional income. The best thing you can do if to find a second job, it maybe menial and tiring but crucial for additional income. Also, nowadays, online is available almost to everyone so maybe it is time to try earn some income online instead? Some activities to earn online like taking survey online, submitting article online, doing assignment to earn, or even play or work online. However, this method cannot guarantee high income and may need some times to high earnings. So these additional income sources itself cannot be implemented as your income earner monthly unless you figure out methods to increase your earnings from these small-scaled jobs to a high level. Ensure that before starting those small jobs for additional incomes you spent zero or less in starting as capital.

Savings and less-risky investment

Once you have identified your incomes and your spending are reduced, maybe you could have some extra money left. Don’t hesitate, kept the extra money immediately into banks, preferably savings account, even though the amount itself maybe as minimum as two digits. Maintain this good habit of keep your extra money or even better, allocate some amount of your earnings for your savings later. It is also the good method to reduce spending and to practice a good savings habit now for the future. You can be surprised how much you can save with your careful planning and research later. It is even better that once you have enough savings, you invest it in other more profitable and less-risky investment such as fixed deposits and unit trusts for some additional income from your investment later. DON’T PLACE ALL YOUR EGGS IN ONE BASKET.

Effort to save

Supplementary to the austerity and savings description above, another way to save is to be aware of any promotions and any offers at mass media or online (ensure it is genuine), like saving coupons, saving vouchers, and discounts. It might be a good chance to save on purchase, but ensure you’re clear of the detail and not to be spent unscrupulous later instead due to the irresistible offer. Spend only on the necessary preferably the ones which has the discount offers but place your limit instead and spent wisely, ensures that the offer gave benefits and not bite you. You can be surprised how much you can save with your careful planning and research later.

Financial consultation

If and only if you’re in the very dire situation, consults your close family members or relatives on how to manage your financial condition. They may offer suggestions to solve your problems and may even offer some financial assistance. The only thing to avoid is constantly asking for financial assistance or you’ll straining your family ties over time. Another consultation appointment you can make is financial management counselling. It is highly recommended for individuals that nears or facing bankruptcy for assistance to face their financial crisis and methods to overcome it. ASK AND YOU’LL BE GIVEN, KNOCK AND THE DOOR WILL BE OPENED.


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