coping with a financial loss

How Deal With Financial Loss [9 Steps To Freedom]

I never thought it would happen to me. I had done my research, knew the risks, and planned for every contingency. But when the market turned against me, my life savings were gone in a single trade. ALL 100K US dollars. Our life savings…

I felt like I had been punched in the gut. All of my hard work and planning had come to nothing, and I was left with nothing but a shattered dream. I didn’t know what to do next.

But eventually, I picked myself up and started again. Losing my life savings was one of the hardest things I have ever gone through, but it was also one of the most important. I learned from my mistakes and vowed never to let myself be so vulnerable again.

Years later, I managed to recoup the lost money, and these are the 9 steps that helped me deal with financial loss.

To recover from a severe financial loss, you need knowledge of your losses, avoid trying to get back your money quickly and while high on emotion, quantify your happiness and paradoxically, think of what you have gained by losing the money, cut back on spending and take control of your budget, find a side hustle to earn extra cash, join a support group to lift your spirits, create a new habit to develop strong mental anchors, and, most importantly, forgive yourself!

1 – Acknowledge your loss and process your emotions

When you experience a financial loss, it can be challenging to cope. One crucial step is to acknowledge your loss. This means accepting the event and recognizing its emotional impact on you. It is normal to feel various emotions, including sadness, anger, frustration, and fear. Acknowledging your loss allows you to begin processing these feelings and moving on.

There are several ways to acknowledge your loss. One approach is to write down what you are feeling. This can help you understand your thoughts and emotions better. You can also talk to a friend or family member about what you are going through. Sharing your experiences can provide support and understanding. Finally, it is essential to allow yourself time to grieve. Mourning the loss of your money can be just as painful as grieving the death of a loved one. Give yourself permission to take care of yourself and do what you need to heal emotionally.

It would help if you also took full responsibility for your role in the situation. This means accepting that you made some choices that led to the loss. It is okay to feel angry or frustrated, but do not dwell on these emotions. Instead, focus on what you can do to improve your situation.

When I lost the money, I blamed everything and anything, trying to get past the initial shock, but it wasn’t helping!


2 – Do not try to make back the money

As hard as it may sound, one of the best things you can do after a financial loss is to accept that the money is gone and move on. Trying to make money back by taking unnecessary risks will only put you in a worse position. It is important to be realistic about your situation and focus on what you can do to improve it.

This doesn’t mean that you should give up on your dreams. If you have always wanted to start your own business, you can use your financial loss as motivation to achieve this goal. Just be sure to take the time to develop a solid business plan and avoid taking unnecessary risks.

When I lost my life savings, it wasn’t the initial loss but my attempts to recover the loss quickly that led to my demise.


3 – [CONTROVERSIAL] Think of what you have gained

The universe keeps everything in balance and is impartial. So, if you have experienced a financial loss, it is likely because you needed the experience to learn and grow. It is an opportunity for you to become a better person. Many people have come out of bankruptcy or foreclosure stronger and wiser. They have learned to budget their money better and are more careful with spending. So, instead of seeing your financial loss as a negative experience, try to see it as a learning opportunity.

Question #1: What exactly have you lost [exact amount]?

Question #2: What have you gained [exact amount]?

Some of the examples may include:

  • a more potent, more loving relationship with your partner, husband, or wife
  • new ideas, insight, and experience
  • unique opportunities that arose as a result of a financial loss

I lost 100K, but what I gained was so much more. I saw that my beautiful wife supported me no matter what. I got my goals straightened out and came up with lots of new and excellent opportunities to earn money that would’ve never come to fruition if it wasn’t for my loss.


4 – Cut back on spending and revise your budget

When coping with a financial loss, one of the best things you can do is to cut back on your spending. This means being more mindful of how much money you’re spending on unnecessary items and finding ways to reduce your costs.

One way to do this is by canceling or reducing your subscriptions to cable, Netflix, and other streaming services. Another option is to cook more meals at home instead of eating out. You can also shop for groceries at discount stores like Walmart or Aldi and avoid buying brand-name items whenever possible.

If you’re looking to save money, you may want to consider selling some of your belongings. This could include things like clothes, furniture, or electronics.

The new reality you are in asks for a new budget plan. It is also essential to have an emergency fund in place in case you experience another financial setback. This should be money you can access quickly and easily if needed.

Make good use of money managing tools like financial apps to help you track your spending and stay on budget.

Finally, if you have any outstanding debts, try to pay them off as quickly as possible to start rebuilding your finances. It may also help to get professional help and talk to a financial advisor to help you solve your financial problems and bounce back.

Once I realized I now had less money, I needed to have a difficult discussion with my wife regarding our daily and weekly spending and the changes we needed to make to stay afloat.


5 – Start a side hustle to complement your existing income

Since I was good at writing, I started freelancing on Fiverr to earn additional income. For the first 2 months, I managed to complete 177 orders and make 6 157 US dollars in total.

fiverr freelance writer earnings 6K USD

Find something you are good at doing and start making some extra money on the side. This can help you offset your financial loss and make it easier to cope with your big financial situation.

There are several ways to make money on the side, so take some time to explore your options. You could start a blog and sell advertising or become a virtual assistant and provide services to clients online. You could also do odd jobs for people in your community or start a pet-sitting business.

After experiencing a significant financial loss and loss of income, and realizing the magnitude of the loss, an additional influx of money can not only help get back a lost sense of financial security and offset financial hardship but also get rid of accompanying anxiety or depression.

I had to double down on my working hours and was exhausted, but it was all worth it as my family started to get back to our feet financially.


6 – Join a support and accountability group

When you experience a financial loss, it can be difficult to cope independently. One great way to get support is to join a support or accountability group. These groups provide a space for you to talk about your experiences and get advice from others who have been through the same thing. They can also help keep you accountable as you work to rebuild your finances.

Group meetings can be a great way to get motivated and stay on track with your goals, but make sure you set realistic expectations for yourself. Make sure it fits your personality and needs, no matter your type of group. The members should be supportive, understanding, honest, and willing to give constructive feedback. Don’t try to do everything yourself – allow the group to help you where they can!

When I lost my money, I started searching for someone to talk to (I was embarrassed to tell even the closest of my friends) and could not find a SINGLE resource dedicated to helping people overcome their financial loss.

This is why I started a forum thread on the matter when anyone can come in and ask for advice and support.


7 – Understand the root cause and create new habits

When coping with a financial loss, understanding the root cause is essential. Often, financial losses can be traced back to poor money management habits or an inability to stick to a budget. By identifying what led to the financial loss in the first place, you can start working on creating new habits that will help you avoid making the same mistake in the future.

Some of the most prominent causes of financial loss are job loss, overspending, medical bills, gambling, and debt.

Once you understand the root cause of your financial loss, you can start taking steps to change your habits. If you’re overspending, for example, you may need to create a budget and stick to it. Or, if you’re in debt, you may need to develop a plan for paying off your debts.

It’s also important to remember that changing your habits takes time. Don’t expect to make all the changes overnight – focus on taking small steps you can sustain over the long term. With patience and perseverance, you can develop new habits that will help you avoid financial loss in the future.

I took a long hard look at myself and the behaviors and choices that led to my financial loss. And you should too.


8 – Donate to the charity

One of the best ways to recover from a financial loss is to donate to a charity. This will help you feel better about yourself and your situation. It’s also a great way to help others who are less fortunate than you.

If you genuinely want to recover your lost money, help somebody in a much worse situation than you. Doing so will create a powerful, energetic connection that will bring the money back to you. The universe is about balance.

I had very little money after the loss, but my wife and I decided early on that we wanted to give back to the community. Money comes and goes, but the effect they have on the lives of others lives on.


9 – Stay positive and forgive yourself

When you experience a financial loss, it can be difficult to stay positive and forgive yourself. Here are a few ways to keep positive and forgive yourself: However, these are essential for recovery.

Remind yourself that everyone makes mistakes

When you make a mistake, remind yourself that everyone makes mistakes. This is just a part of life; you can learn from your errors.

Give yourself time to heal

When you’re feeling down, it can be tough to think positively. One of the best things you can do is to forgive yourself and give yourself time to heal.

Stay focused on your goals

It’s important to stay positive and remember that you’re capable of reaching your goals. Please don’t dwell on your past mistakes; learn from them and continue moving forward.

Visualize your success

Visualize your success. Imagine how great it will feel when you achieve your goals. Picture yourself celebrating your success and enjoying all the rewards that come with it. Try this affirmation to recover the lost funds.

Use positive affirmations about money and success

Telling yourself positive affirmations about money and success is a great way to stay positive and motivated. Here are a few examples:

“I am worthy of abundance.”

“I am attracting wealth and prosperity into my life.”

“I am confident and capable of achieving my financial goals.”

“I am surrounded by financial abundance.”

Go HERE for a complete list of 50 Affirmations to recover from a financial loss.

Try gratitude exercises

One way to work on forgiveness and to stay positive is to practice gratitude exercises. Each day, take a few minutes to write down five things you are grateful for. It can be something as simple as the sun shining or your favorite song playing on the radio. Focusing on the good things in your life and appreciating them is crucial.


When feeling overwhelmed, doing deep breathing exercises or meditating can be helpful. This will help you relax and clear your mind. Many free resources are available online, or you can download a meditation app. A simple ‘watch your breath’ exercise may come along.

After the blaming stage was over, I turned on myself. That lasted for over a year and did me nothing good. It would help if you took full responsibility yet forgave yourself to move forward.


Financial loss coping strategies that don’t work

Many people believe that there are specific financial loss coping strategies that don’t work. While it’s true that no one strategy is guaranteed to work for everyone, people make some common mistakes when dealing with financial loss. Here are three of the most common:

1. Relying on credit cards: Using them to cover expenses can help you in the short term and add to your debt in the long run. If you’re already struggling to make ends meet, adding more debt can worsen your situation.

2. Borrowing from friends or family: Asking for financial help from loved ones can be difficult, but it’s important to remember that they are not obligated to help you. If they agree to lend you money, be sure to repay them as soon as possible. Otherwise, you could strain your relationship.

3. Taking out a loan: It may seem like an easy solution, but it’s important to remember that loans need to be repaid with interest. If you cannot make the payments, you could end up in even more debt.

People often try many other financial loss coping strategies, but these three are some of the most common—and least effective. Avoid these mistakes and explore other options if facing a financial loss.

sad white middle-aged man coping with stress

Effects of financial stress on your health

It Can Raise Your Blood Pressure

One of the financial stress’s most common physical effects is high blood pressure. When you’re under a lot of financial pressure, your body goes into “fight or flight” mode. This causes your heart rate to increase and your blood vessels to constrict, leading to high blood pressure. If you already have high blood pressure, financial stress can make it worse. Studies have shown that people with pre-existing hypertension are more likely to have a heart attack or stroke under financial stress. 

It Can Weaken Your Immune System

Cortisol is a necessary hormone – it helps us deal with stressful situations by telling our body to release energy stores so we can deal with the threat at hand. If you are experiencing grief and loss after a big financial loss, your body may produce more cortisol hormone. But when cortisol levels are too high, it can weaken our immune system and make us more susceptible to illnesses such as the flu or the common cold. High cortisol levels are also linked to chronic conditions such as heart disease, obesity, and type II diabetes. 

It Can Affect Your Sleep Pattern

It’s no secret that money troubles can keep you up at night. If you’re worried about how you’re going to pay your bills or whether you’ll lose your job or mortgage, it’s tough to fall asleep and stay asleep. This lack of sleep can lead to many other problems, including fatigue, depression, anxiety, and weight gain. Studies have shown that people who don’t get enough sleep are more likely to make poor financial decisions – so if you’re already struggling financially, getting enough sleep is crucial. 

The US states that might be susceptible to Financial Losses (Google Trends Data)

The first chart shows a steep increase in the popularity of the ‘financial loss’ search query representing the current state of economics in the US and the World.

Google Trends, US, ‘Financial Loss’ search query

The second chart below attempts to categorize different US states according to their risk profile and the probability of their residents experiencing varying levels of financial loss.

US States clusters based on their risk profile

Based on the chart above, we can cluster different states into 4 different groups.

LouisianaRhode IslandMichiganDelaware
MissouriNevadaMaineNorth Dakota
IdahoAlabamaNew HampshireSouth Dakota
ArizonaKentuckyNew MexicoIllinois
TennesseeWest VirginiaNebraskaIowa
New JerseyWisconsinNew York
South CarolinaOregon
North CarolinaDistrict of Columbia

Feeling Lucky (High ‘make money fast, Low ‘lost money):

Feeling Riskey (High ‘make money fast, High ‘lost money):

Feeling Confident (Low ‘make money fast, Low ‘lost money):

Feeling Uncertain (Low ‘make money fast, High ‘lost money):


Now that you have learned the essential steps to coping with financial loss, it is time to summarise them. If you want to recover quickly, you need to accept your losses. Avoid trying to get back your money quickly and while high on emotion. Quantify your happiness, and paradoxically, think of what you have gained by losing the money. Cut back on spending and take control of your budget. Find a side hustle to earn extra cash. Join a support group to lift your spirits. Create a new habit to create strong mental anchors. And, most importantly, forgive yourself!