How to re-build your financial confidence

On a global macro-economic scale, 'recession' and 'economic downturn' have become common phrases in the last five to seven years. But it is not just countries that face these issues - many individuals or families are facing their own recession and economic downturn. Because of the financial complications on an international level, many individuals have lost their employment or have had their hours reduced, which, in turn, has lead to financial hardship, high debts and even, in many cases, bankruptcy. What's more, the reduced financial means can lead to a loss of financial confidence. As a result, many households are scared to spend at all and will avoid investments at all cost, even if they are almost sure to be highly lucrative. Needless to say, this can only come as a disadvantage to those already strapped for cash.

Personal marketability

Financial confidence can be knocked by a variety of factors: the loss of a job, reduction in salary, inability to repay debt or other reasons. There is always the opportunity to recover from financial hardship but confidence is the key to this. In order to improve your financial position, you must have confidence in your own marketability. This is precisely where things start going wrong for many affected by the economic crisis. Which is a shame, since the road to recovery is actually pretty straight-forward: When financial confidence is reduced, it is important to simply step back and have an honest appraisal of the situation. In order to rebuild financial confidence, it is essential to go back to basics such as accurate and honest budgeting and have expectations that are realistic and not overly ambitious.

Expert advice

This may not always be enough. To re-build financial confidence, it may, however, in some instances nonetheless be necessary to take some expert advice; this advice may be from an independent financial advisor, a debt counsellor or perhaps an organisation such as the Citizens Advice. These organisations may look at all the facts and figures from a clear and practical perspective and provide advice on how to progress in a positive fashion. There is also online information available and websites such as Moneysavingexpert.com provide information on various aspects of money management and debt consolidation and reduction. Visiting websites like these should be part of your daily routine – and by subscribing to their newsletter, you can make sure to never miss out on sensible advice and helpful suggestions.

Positive action

Very often when individuals are affected by a financial crisis, they become unable to see a way forward. It is indeed very easy to become apathetic and inactive and simply resign to one's fate. Instead, it is essential to take small and positive steps forward. It is important to recognise that there is a problem, assess the overall impact of that problem and look for actions that will alleviate the situation. Debt counselling may present a positive opportunity to learn from mistakes and rebuild financial confidence. Organisations such as the Consumer Credit Counselling Service can offer very sound advice and help for anyone in financial difficulties. CCCS is a charity and will not charge for advice and help. However there are some organisations that offer similar service but may charge for them – make sure there is a definitive advantage to working with them and that their charges are justified, if you're interested in making use of their services.

Another important step forward can lie in applying for a basic bank account online. This new type of bank account can assist you in significantly improving your finances, reducing your debt, bringing your earnings and spending into balance again and help you budget more sensibly. This is achieved by only allowing you to spend what you really have and eliminating all overdraft- and credit-facilities from the equation. It may take some time to get used to this, but you'll come to appreciate a guaranteed account precisely for these missing facilities and the chance to get back into the black again.

Individuals can feel powerless when in financial difficulty but there are many small actions that can be taken to alleviate difficulties. It is important to be honest and practical and listen to advice before making any decisions but there is no debt or financial problem that cannot be solved – it is true on a global macro-economic scale and it is certainly true for you personally. 

By William Masters

William Masters is a respected finance journalist, who has contributed to a wide range of print- and online-magazines. He currently lives and works in London.