Rebuilding Your Finances In 7 Simple Steps

Rebuilding your finances guide

Rebuilding your finances guide

Rebuilding your finances after an abusive relationship is difficult. Be it a physically abusive or mentally abusive relationship.

But there is another form of abusive relationship: Financially abusive relationship.

Yes, surprisingly, financially abusive relationships are on the rise. Also, it is a very common symptom in domestic violence cases.

The impacts of financial abuse are best known to its sufferers and survivors. These impacts continue well after the relationship is over.

They are way more overwhelming than other forms of abuse as they undermine the survivor’s capability to explore through life inside and out.

Financial abuse can take multiple forms: 

A few abusers use control and dominance to secretly stay responsible for a victim’s funds while others resort to by and large terrorizing or threatening the victim.

Regardless of how financial abuse presents itself in a relationship, it can make it very hard for exploited people to get away, and once they do get away, they are forced to start and rebuild their financial position from scratch. 

Does that ring a bell? Have you ever thought “My financial situation is not good”?

Want to learn how to get financially healthy again? Read on.

Starting Over and rebuilding your finances

The initial step in these types of situations is to get away from the toxic person and circumstances. I know it’s easier said than done but this is how one will have to begin.

While the next step can be a difficult one, but after the escape, you’ll have to begin thinking about ideas and opportunities that will enable you to build and strengthen your financial position at the same time.

Here are some simple steps you can take to build up your financial independence and guarantee your long-term financial well-being:

First step for Rebuilding your finances: Open new accounts 

A few survivors may have done this back when they were planning for escape, yet any individual who hasn’t should make it a priority. Before opening an account, you must research and pick a bank that meets your requirements. 

If you are tech-savvy, I would advise you to pick a bank which has a facility of net banking. This will ensure that you can manage your accounts on the web.

Do some online research, converse with companions or family for suggestions and settle on an educated choice for the bank. 

Opening an account is a very simple procedure. You’ll require some common documents like Aadhar card, address proof (electricity bill) among others. But, if you are not sure about the whole process, you can ask any of the bank staff and I’m sure they will be happy to help out.

 Also, a few banks require some minimum amount of deposit in the account. In the event that you have enough cash for this minimum deposit, it’s a smart thought to open both a checking and a savings account. 

Second step: Make a budget

A month to month budget gives you authorization to burn through cash whenever you need to. By taking the time to make a budget, you can make your life simpler.

Basically you shouldn’t spend more than you make every month. You need to make sense of what works best for you and your money related objectives and then draft a budget intelligently. There are a variety of strategies to improve financial situation using budgeting: 

50/30/20

To keep a track of your salary every month, utilize the 50/20/30 guideline for your spending planning.

The 50/20/30 rule offers a fundamental budgetary system for your spending and sparing. The standard says that you ought to burn through half of your pay on your everyday costs.

According to this guideline, you should invest 20% of your salary in investment funds and make provisions for savings. You can utilize the rest 30% for recreational activities without worrying about a cash crunch.

Since the 50/20/30 standard is just a guideline, there is some adaptability.

You can change the specific portions dependent on your individual circumstances and approach towards rebuilding your personal finances.

The fundamental thought is to confine your everyday costs to generally half of your pay. That way, you’ll have enough remaining for your savings and recreation.

80/20 

An easier variant of the 50/30/20 strategy is the 80/20 spending plan, which simply has you take 20% of your salary to put towards investment funds and freely spend the rest.

You can change the ratio to suit your personal needs. However, this method is not suitable for beginners because of its vague nature. 

Envelope technique 

On the off chance that divisions aren’t generally your thing, there is likewise a system called the envelope technique.

Name envelopes with certain cost classes like rent, utilities, groceries, eating out, amusement, investment funds. The thought is to physically put aside the cash you will spend in every classification. 

Budgeting applications 

There is an app for pretty much everything, and budgeting is no exemption. 

You can get the Bachat app that will help you make automatic savings and what’s more, it will even reward you for your savings.

The Bachat app transfers a fixed proportion of your monthly income to a particular savings account for you.

Third Step: Begin building credit 

Your credit report decides how reliable you are according to banks. Try to maintain your credit rating by repaying your credit card debt on time. 

Fourth Step for rebuilding your finances: Build an Emergency Fund

Emergency funds are meant for financial emergencies which are somehow related to either your financial health, physical health or your assets.

But before proceeding further, I would like to take a moment here to characterize what an emergency fund isn’t:

  • It isn’t utilized for pre-decided and arranged buys like a house, vehicle etc.
  • It doesn’t need to be a huge, unattainable sum
  • It’s not a fixed sum for everybody—it fluctuates dependent on your way of life

While you cannot suddenly come up with a large emergency fund, you can at least begin to start saving.

It can become considerably difficult to take out a chunk of your earnings every month for an event that is completely unknown. Here are a few simple ways to help you save money every month and contribute to your emergency fund:

Cut your ordinary expenses

To begin with, you can cut your everyday expenses and set aside the cash you save this way for your emergency fund.

Simple approaches that will enable you chop down your everyday expenses are limiting the number of times you eat outside, buying groceries in bulk, using AC only when absolutely required and cutting down luxurious costs.

For more tips on saving money, check out: “8 Best Frugal Living Tips In India.”

Transfer all ‘bonus incomes’ to your emergency fund

In case you can’t cut down anymore of your expenses, you can consider utilizing ‘bonus incomes’ to add to your backup stash.

These bonus incomes may include rewards from work, cash from selling unused house objects that you won’t use in the future and envelopes you get on your birthday.

Sell things that you’ll never use again

You can easily gain extra cash by selling things that you know you’ll never use again. These things can include some old show-pieces, old books, old chargers etc. You can do so easily through sites like OLX.

Consider starting a side business

An effective way to increase your emergency fund is to increase your income. You could begin a side hustle, work overtime, and work on weekends to earn extra money. This will enable your rainy day account to grow rapidly.

In the event that you haven’t already started building an emergency fund, you need to begin today. It’s never too late and even if you begin today and sincerely work towards growing your fund, trust me, you’ll have a huge amount of money saved as your backup stash.

An emergency fund is also a good mental assurances when you’re rebuilding your finances.

Having a backup stash gives you a significant peace of mind and calmness to deal with a crisis situation.

If you want an in depth guide to build your emergency fund, check out our guide: Why You Need An Emergency Fund And How To Build Emergency Fund

Fifth Step: Join the Work Force 

For certain survivors of financial abuse, starting to work while rebuilding your finances is new. It tends to become disheartening when you can’t get a new line of work immediately.

But, keep in mind this is only a beginning stage, and there are resources and opportunities that can enable you to get back into the workforce. 

Sixth Step: Indulge in a Side Hustle 

In case you’re searching for some additional money to add to your budget spending plan, consider starting or rather, getting involved in some sort of a side hustle. 

This is an extraordinary method to make new contacts, maybe pursue a hobby and get familiar with another expertise – all while getting more cash and successfully rebuilding your finances.

You can compose specialized articles, deal with secretarial work, start babysitting services and pretty much anything and everything. in the middle. If you are into craft work, you can sell your creations online. 

Seventh Step: Never Give Up

Rebuilding after escaping a financially abusive situation can take a toll on your mental and physical health. But, don’t give up. You must see this challenge as long-term and not short-term. 

You must learn to celebrate every step, big or small, towards achieving financial independence and rebuilding your finances. This will keep you motivated. 

This phase in your life can seem to be never-ending, but trust me, Har raat ke baad savera hota hai! (every night is followed by a bright morning)

Attempting to rebuild your finances can be long-term procedure, but I hope these tips help you in doing that.

All the very best, YOU can do it!

How do you recover financially?

The initial step in these types of situations is to get away from the toxic person and circumstances. I know it’s easier said than done but this is how one will have to begin. While the next step can be a difficult one, but after the escape, you’ll have to begin thinking about ideas and opportunities that will enable you to build and strengthen your financial position at the same time.

How to recover from a low credit score?

Your credit report decides how reliable you are according to banks. Try to maintain your credit rating by repaying your credit card debt on time.


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