The Key to Overcoming Financial Hardship

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More likely than not, you will experience some form of financial hardship in your lifetime.

Some of these will be minor challenges like a layoff or a series of missed mortgage payments, others will be significant like divorce or declaring bankruptcy. Often one financial hardship begets another, so don’t be surprised if a layoff leads to divorce which ruins your credit and forces you into bankruptcy.

If you think you’re too smart to ever have to deal with financial hardship, rest assured life will find something to hit you with at one point or another.

What is financial hardship?

Financial hardship is much more than having to live on a tight budget. Instead, it refers to the long-lasting and lingering consequences of a financial catastrophe.

The very definition of financial hardship is being willing but unable to meet your obligations because of unexpected events or unforeseen changes that have compromised your financial security.

This could be anything from being unable to pay your rent because you’re not earning enough money, to missing payments on your student loans or credit cards even though you very much want to be debt free, to being unable to save for retirement even though you understand the importance of setting money aside for old age.

Financial hardship is not overspending on consumer goods or failing to stick to a budget, it’s the prolonged result of one or more serious financial challenges.

Once you’re knocked out down, it’s very hard to get back up

One of the main challenges of overcoming financial hardship it that it can happen to you in an instant but take a lifetime to overcome.

You can become widowed or disabled, which will instantaneously undo all your lifetime financial plans. It will take you decades to get back on track, and it’s possible that you never will. Sometimes financial hardship will necessitate letting go of a lifestyle you enjoyed or expected, forever. Aside from a lucky break or unexpected cash windfall to rapidly undo your misfortune, you have little choice except to adapt to your new reality.

Get out of denial and into a healthy headspace

The faster you can move from denial or depression to acceptance, the sooner you’re going to be ok.

Sometimes the hardest part about financial hardship is accepting that you’re experiencing it. Most people don’t want to admit they’re in trouble until they have no other choice. Ideally, you want to acknowledge rock bottom before you have to set up shop there, but if it does take arriving at nowhere-to-go-but-up to make you turn around, that’s ok too.

Once you’re in the thick of financial hardship, take solace in this: this is how bad it gets.

In other words, you’re done. This is the worst. If you’ve lost all your money to an online scam and your wife left you for a pirate and you were fired without severance pay from the job you thought you’d have until retirement, you’re probably at your lowest point. Welcome, friend. It’s probably not going to get any worse. Which means it’s only going to get better.

Recommended reading: Choose Yourself by James Altucher

Once you know things can only get better (even if they’re still really bad) you can let that little glow of good feeling in that you probably haven’t felt in a long while: optimism.

I don’t expect you to transform into Pollyanna overnight, but you’re more likely to be able to put one foot in front of the other if you believe the destination ahead has something to offer. You don’t have to be alright, let alone happy, and you don’t have to be optimistic every hour or every day, but you do have to believe enough that there is something worth moving forward for in order to give it a try.

Cut your losses and take your baby steps

If your lifetime savings is gone, it’s gone. Don’t spend another second missing it. Whatever catastrophe landed you in financial hardship in the first place is something you need to accept as a reality and start moving away from.

There might still be cards to fall. Maybe all your debts haven’t gone into collections yet, or you still have 2 weeks before you have to move back home with your parents. You can accept these moments before they happen, then watch them with a passive zen-like apathy of someone on a much higher plane of existence.

Once you’ve accepted your starting point, inch your way out.

This can mean updating your resume or opening a new savings account and putting $5 in. It won’t feel like it, but now you’re officially better off than you were just 30 minutes ago. Small actions yield big results, all it takes is time. The important thing is that you begin.

Related post: You Only Have to Do One Thing Right With Your Money at a Time

If you need help, get it. This can mean anything from professional counseling to deal with the emotional and mental toll of the massive changes in your life, to help from a bankruptcy trustee, lawyer, or financial advisor, depending what your circumstances are. Some of your efforts will feel futile. Some will be expensive, adding insult to injury. But don’t procrastinate getting what few ducks you have left in a row. The thing you need most when experiencing financial hardship is financial security, so you have to do everything in your power to get back there — and more often than not, this is a two steps forward, one step back sort of thing.

Protect yourself from further catastrophe

One of the upsides to experiencing financial hardship is you’re unlikely to leave yourself vulnerable to it again. Even if what happened to you was unexpected, you can probably identify areas where you left yourself vulnerable:

  • Was your emergency fund insufficient?
  • Did you take unnecessary risks with your investments?
  • Did you choose a bad partner?
  • Was your lifestyle inflated to the point that a dip in income couldn’t be managed?
  • Were you carrying too much debt?

Chances are, you now know your weaknesses better than ever, which means you can work on transforming them into strengths. The unfortunate truth is, depending on the magnitude and length of financial hardship you experienced, you may never get back to the life you had before. But that is not the same as never getting back to good.

Keep moving forward, you’re going to be ok.


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  1. Yes. There is a HUGE difference between fighting to meet your money goals and actually going through hardship. I fortunately never had to go through severe financial hardship and I’m grateful for that. We do protect ourselves from hardship by maintaining a healthy savings account. We also do preventive maintenance on our homes and cars to prevent expensive repair costs (which can sometimes be devastating).

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  2. HJ

    Bridget – Thank you for always wise comments and helpful suggestions. In your video you hit on such an important point , especially when things have gone awry – to treat ourselves compassionately when we are working through mistakes of any kind, including financial ones.
    Thank you for the obvious research and thoughtful reflection that go into all the content on your site.

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  3. “Often one financial hardship begets another, so don’t be surprised if a layoff leads to divorce which ruins your credit and forces you into bankruptcy.”

    This is one very depressing sentence :). I think getting out of financial trouble starts with the right positive mindset first.

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