Feeling Stuck Financially? Hit the Reset Button.

You’ve been diligent with your money. You’ve amassed sizable savings. Then life knocks on your door – a once-in-a-lifetime opportunity falls through, work moves you to another state, a family emergency calls, or your primary source of income evaporates. Years of diligent financial progress comes undone in an instant, and now you feel stuck.

Or maybe you’re in a position where you’ve struggled for years to get a handle on your finances, but one disruption after the next keeps you from moving forward. In either case, what can you do when your financial life is stuck? Hit the reset button. Indeed, you can often get your financial life back on track much sooner than you would otherwise by pausing, resetting expectations about your goals, and being methodical in your approach to rebuilding your finances.

Pause and Disconnect

Unplug it and wait a minute. Shutdown your computer. Power down your device. If you’ve ever encountered a problem with technology, then one of these phrases will likely be the first recommendation you’ll receive to correct the problem. While such advice often comes after you’ve spent many frustrating hours trying to get your router, computer, or phone to do what they’re supposed to do, the simple solution often does the trick.

But what do you do if your net worth or savings have declined in value recently? After years of building up your nest egg, what remains today is only a fraction of its once glorious worth after a down move in the markets, a family emergency, or loss of income. During such times it’s quite common for feelings of discouragement and negative self-talk to emerge, and you may even feel the temptation to make a big-ticket purchase or have the desire to double down on a loss.  

One of the quickest methods, however, to reduce money-related anxieties and regain a sense of financial empowerment in your life during a time of loss or transition is to stop what you are doing, pause and take a break. Doing so may enable you to postpone financial decisions that you may later regret while giving you the ability to assess events that may or may not have been within your control.  

What’s more, like a project post-mortem or military debrief, the initial act of disconnecting from your financial routine shifts your focus from trying to fix a problem to reviewing lessons learned that might enable you to see opportunities in your new setting. More importantly, pausing and disconnecting may prepare you to rebuild your financial life in a way that is authentic to the present while making room for future growth prospects. 

Reset Your Financial Expectations

In his book, Marshall Goldsmith, “What got you here, won’t get you there” writes how successful leaders who progress in their careers must let go of old thought processes and adopt a fresh set of beliefs that fit their higher leadership positions. During times of financial adversity, you may double down on your existing financial habits in a bid to restore what you’ve lost or to get yourself unstuck. You may even end up taking actions that move you away from your problems like avoiding money related matters or procrastinating on critical financial decisions. What can you do if you find yourself in this situation?  

If you want to get your finances back on track after a significant loss, then one of the first things you’ll likely need to do is pause, disconnect, and identify an ideal financial outcome to move towards.  The trouble with repeating old habits or moving away from an unfavorable situation is that your focus remains hinged on the past. For example, an at-bat baseball player is unlikely to get a base hit by worrying about striking out rather than focusing on the pitch.

So, what can you do to shift your focus to the future? Reset your expectations. Start by getting crystal clear about how you want your financial future to play out, given everything that has led you to the present circumstance. If your current financial situation causes feelings of disappointment, start thinking about the kinds of outcomes that would lead to feelings of achievement. And while goals, in general, are an excellent place to start, be sure to create financial objectives that set out specific outcomes for your life’s aim. 

To be sure, your chances of getting financially back on track will rise when you reset your expectations from past mistakes and shift your focus toward ideal future outcomes.

Get It All Out on the Table

Your new financial objectives focus on the future and tell you where you’re heading. But how exactly will you get there? Now’s the time to sort through bills, statements, and reports and get everything on the table to evaluate your available financial resources. Think about this process from the perspective of a professional home organizer.

An individual may hire a professional organizer because they have a vision for how they would like their home to look and feel, but not sure what to do with all of their clutter. In some cases, a professional organizer will clear all the belongings out a room and work with their client, item by item, to decide on which pieces fit (and do not fit) into the future vision set out for their home.

After you’ve had a chance to reset your expectations, gather financial documents that will help you understand your debts, assets, and cash flows better. Start by pulling a copy of your latest credit report. This information will help you learn more about your outstanding debt, credit availability, and minimum payments on your various loans. Also, review statements or call your lender to determine the interest rate on your accounts.

Then, gather a list of your assets. Start with the current balances on your checking, savings, brokerage, and defined contribution accounts like a 401(k) or 403(b). Be sure to include retirement accounts left behind at an old job and pay particular attention to the cash values of defined benefit pension plans available to you. Also include the equity in your home, value of your automobiles, motorcycles, and any other readily saleable non-financial assets.

Next, make a list of all the expenses you have and expect to address soon. A straightforward approach to this end is to pull up your bank or credit card statement and review your purchases from the past three months. Then, categorize your expenses as either essential, discretionary, or savings. Computer software and phone apps can help automate and simplify this process. Either way, your aim is to capture and understand trends in your spending patterns.

Keep in mind that this process is likely to evoke mixed emotions as you recount past financial decisions. That’s why it’s essential to pause, disconnect, reset your expectations, and focus on the future as you develop a broad picture of your finances. Remember, a professional organizer removes belongings from a room to decide what to keep and what to throw away. That’s why getting all of your finances on the table is crucial to success because without knowing what you’ve got to work with, it’s hard to know what sort of plans to make to achieve your goals.  

Prepare for a Marathon, Not a Sprint

If you know someone who has participated in a marathon, you’re likely aware of the incremental wins that may have led to that runner’s overall victory. For example, going from being a couch potato to running a marathon does not happen overnight, even for some of the fittest individuals. A runner intent on successfully competing in the race will map out the steps they need to take, day to day, week to week to build the endurance necessary to compete in a competition they haven’t run before.

The next step in getting your finances back on track is to bridge the divide between your desired financial objectives (future) and the financial resources at your disposal (present). This step can be one the most daunting and is one reason why getting unstuck financially is a marathon, not a sprint.   

From this perspective, start mapping out how you will achieve your goals one financial objective at a time. For instance, if your goal is to rebuild your savings that have recently taken a hit, then efforts necessary to achieve this aim may include:

  • Having a crystal-clear financial objective geared toward improving your cash flow (future)
  • Understanding all of the financial resources available to you now (present)
  • Reviewing spending trends and cutting back on non-essential expenses
  • Rolling over old 401(k) accounts to reduce fees and improve oversight
  • Consolidating multiple high-interest debt obligations into one lower-cost payment
  • Selling assets (car, motorcycle) that you could do without at phase in your life

Each of these actions, incrementally, can help you move closer to your savings goal. It’s important to note that all of these steps do not have to happen at once. Tackle one task in your plan at a time and go for the most comfortable wins first. In fact, starting with small, bite-sized actions as you take a new approach to your finances will make the task feel less daunting and less overwhelming. What’s more, as you mark completed tasks off your list, you’re likely to increase your feelings of achievement. And these positive feelings can help you build momentum as you look toward achieving other crucial financial goals.

Knowing When to Get Help

Many tools and resources are available to help you work out the items discussed here on your own. Such tools include websites, apps, books, videos, seminars, and blogs that outline steps to deal with uncertainty and lead to the creation of a solid financial plan.  

A time may come, however, when you find that working with a financial advisor may help improve your odds of successfully getting your financial life back on track when compared to going it alone. To be sure, resetting expectations about your goals and thinking through financial objectives can be emotionally taxing, particularly after a significant life transition or financial event.  

Maybe you’ve even done the work to assess your current financial situation but are still unsure how to create a bridge between your current financial situation and your ideal future financial objectives. A financial advisor can help by empathizing with your circumstance while bringing an objective perspective to your state of affairs and making recommendations that align your lifestyle with your desired financial outcome.  

At the same time, a financial advisor, in many cases, has access to sophisticated tools and the requisite experience to help find balance in your lifestyle so that you can work toward important goals and still enjoy life today. To be sure, if you don’t have the time or inclination to create a plan, but know you have important work to do, bringing in outside help can improve your chances of getting unstuck.

In either case, whether you decide to go it alone or bring in the help of a professional, one of the quickest ways to get your financial life moving in the right direction is to it the reset button. Getting unstuck and putting your financial life back on track begins by pausing, resetting expectations about your financial goals, and being methodical in your approach to rebuilding your finances.  

About the Author

Peter Donisanu
Peter Donisanu is Chief Financial Strategist and President at Franklin Madison Advisors, Inc. Franklin Madison Advisors is a fee-only fiduciary financial planning and investment management firm based out of Pittsburgh, Pennsylvania and serving clients nationally. We exist to serve a generation that has been underwhelmed by traditional paths to financial security and independence.