Stressing about money is no laughing matter, especially if you don’t know how you’ll pay your bills or where your next meal is coming from. These rough times can keep you awake at night and put you in an evil mood. It’s hard to find the silver lining when you’re dead smack in the middle of a financial crisis. But after rising above a setback, you can draw a few valuable lessons from the experience. Here are five things we can learn from financial hardships.
The Importance of Budgeting Money
Maybe you didn’t have a budget prior to going through a hardship. Some people don’t give any thoughts to budgeting when money isn’t an issue. But if you’re barely earning enough to survive, a budget is your best friend because you’re able to come up with a spending plan for every dollar you earn, which can be the difference between making ends meet and running out of cash before the end of the month. Plus, if you get into a routine of creating a weekly or monthly budget while you’re broke, you’re likely to continue this practice after your finances improve.
Prioritizing Your Spending
Along with becoming a better budgeter, going through a financial hardship can teach you how to prioritize spending. When you don’t have a lot of money, you have to spend and make purchases based on order of importance. For example, you might have to choose between going out with your friends on the weekend and buying groceries.
Having your back up against a wall can spark your more frugal side and alter your money mindset, completely changing the way you manage money even after a crisis ends. You learn how to distinguish wants from needs. And when your priorities are in check, you gain the strength to withstand financial peer pressure.
Debt Is the Enemy
The more you owe, the harder it is to survive tough times—something you may not realize until you come face-to-face with money problems.
Living simple is such a basic concept, yet many people fail to realize the benefit of living within or beneath their means. Credit card debt and unnecessary loans may not be a big deal when you’re getting steady paychecks. But if your income drops, monthly debt payments can add to your financial stress and make it difficult to keep your head above water.
You can’t change your past credit habits, but you can learn from past mistakes and make better choices with your money moving forward. For the first time ever, you may understand the importance of paying with cash and only applying for credit when absolutely necessary.
Everyone Needs a Cash Reserve
I’m often amazed by people who don’t grasp the need for an emergency cash reserve. Some hardships are temporary, such as those that result from losing a job or an illness. It’s easy to downplay the need for a savings account when money is the least of your worries. However, there’s nothing like going through a major crisis without a safety net to help us realize the importance of a reserve.
How to Let Go of Pride and Become a Hustler
Going through a hardship is also one of the quickest ways to become a more humbled person. I worked as a receptionist throughout college and I’ve always said I would never do this type of work again. Perhaps you’ve made similar statements about a past job or a particular occupation, and maybe you feel certain jobs are beneath you because of your education or level of experience. But the truth is, we may have to put personal pride aside to provide for ourselves. And sometimes, being in a tight spot can bring out our inner hustler.
I know a single mother who had her hours reduced at work—a $600 a month hit. She couldn’t find a new job right away and ended up burning through her modest savings in about four months. She could have complained or throw herself a pity party, but it wouldn’t had accomplished anything. The only option was to take matters into her own hands.
Despite having a bachelor’s degree and more than a decade of administrative experience, she spent about $50 purchasing basic cleaning products and printing flyers, and then began cleaning houses on the side to make ends meet. She did this for almost a year until she was able to find another job.
Whether you come from humble beginnings or you had your financial world flipped upside down, going through a hardship can have a profound impact on your life. Not only can you learn the above lessons, money struggles teach patience and resilience. You might not have control over the situation, but you have control over your emotions. With that being said, hardships can help you appreciate the more important things, and you’ll realize that you don’t need money to be a happy person.
What other lessons can be gain from being broke?