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Financial Wellness Series: Moving on from a financial loss

Financial security allows people to focus on achieving their dreams to build a fulfilling life. Without it, feelings can turn towards anxiety and despair, especially if the insecurity stems from a serious financial loss.

The loss of income or a large sum of money can happen quickly and without warning. Losing a job or your business, suffering from illness or failing health, or going through a divorce are life changes that can devastate your finances. Even a regrettable investment decision can lead to a sizeable financial setback. Such a loss, however, can be temporary depending on how you respond.

Running into money trouble is a lot less scary if you know how to recover from it.

The sooner you can accept and embrace that there is no quick recovery from a sudden financial loss, the more likely you are to recover from the loss and move on. Here are some things to consider if youíve faced a large financial loss:

Donít make any sudden financial moves. Emptying out your RRSP may cause even more problems in the long run. Aside from the tax hit, an ill-timed withdrawal may add more years to recover from the loss. Itís important to stay calm and avoid making any raw emotional decisions. Instead, this is a time to seek the advice of a trusted professional. A financial advisor can help you assess the impact that the loss might have on your short-term and long-term goals and offer some constructive ideas to help you get back on the road to recovery.

Change your mindset. Take a step back and accept that the money is gone. Revisit your wants and needs. Revise your financial plan by setting new goals and timelines. Engage your family to be part of the solution. Regardless of the circumstances, thereís bound to be a fitting solution. Adjusting to a new financial picture might require a higher level of discipline and resolve. You can rebuild your wealth.

Examine what caused the loss. Future losses may be prevented if you recognize the cause and take appropriate steps to guard against a repeat of the situation. If the money issues look as if they will continue for some time, changes to your lifestyle may need to be taken.

Focus on the present and the future. What is in the past cannot be undone. Celebrate small goals and give yourself a reason to look forward instead of backwards. As you move further away from the problem, be sure to share updates on your progress with your financial advisor, who can continue to help you understand the benefits and consequences of the options at each new stage of your recovery.

Most importantly, donít despair. Most losses donít last forever. With some professional guidance and a solid plan, your position could turn around relatively quickly. You can then chalk up the experience as an unfortunate setback to learn and move forward from.

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This article is provided for information purposes only. Although the content is believed to be reliable when posted, Stonebrooke Private Wealth Management Ltd. cannot guarantee this information is current, accurate or complete and does not assume any liability. The information is not intended to provide any insurance, financial, legal, accounting or taxation advice and should not under any circumstances be relied upon without consultation about your specific situation. The information is subject to modification and updating from time to time without notice.

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