It takes years to build up a substantial amount of savings in your nest egg, but you can lose it all within a much shorter amount of time. This is a devastating experience for anyone, so it’s important to take the time to grieve that loss. It may take several days or a couple of weeks, but it is important to acknowledge the emotional trauma this loss will cause. Once you recover emotionally, these steps will help you to financially recover.
Seek Out Support
You can find support in many different ways, including confiding in a romantic partner, spouse, or another family member. There are also support groups in your community and online for people who are struggling to rebuild their finances after devastating losses. If your loss was the result of mounting debt, you might also need more practical support. A bankruptcy attorney or credit counseling agency can help you explore the options for getting out of debt. This will be a necessary first step before you can begin rebuilding your savings.
Create a New Budget
This is the best time to write a new budget that you can put into action. This budget should allow you to meet your monthly financial obligations while leaving you at least 20% of your income as disposable cash. That 20% should be divided three ways, with half going towards paying your debts off. The other half should be divided a second time, with two-thirds of it going into a savings account. The remainder can be used for entertainment and a few luxuries.
Set New Goals
Now that you have started to rebuild your savings, you should have new goals to work towards. This should include opening a Roth IRA to help you build up your retirement savings in addition to your primary savings account. Additionally, consider your goals for buying a house, getting a new car, or taking a vacation. You should create plans for these goals and begin working towards them. By creating both short and long-term goals, you’ll give yourself a reason to feel hope for the future.
While it will take you some time to rebuild your savings, it can be done. This guide can help you create a strategy that will help you regain what you have lost in the shortest possible time frame. In doing so, you’ll learn new financial lessons that will help you to better protect your savings in the future.