The thing about life is, you never know what’s going to happen next. One minute, all is right with the world and the next, something happens to shake things up. The craziest part is – somehow, your finances are always intertwined. The furnace breaks, your relationship or marriage ends, you lose your job, you suffer some sort of injury, or a number of other things happen and your budget, savings, and credit all go down the drain.
When life throws you for a loop, managing your finances may seem challenging, but it is essential. Failure to have a financial game plan in place for unforeseen circumstances can leave you stressed out and drowning in debt for years to come. To safeguard yourself and anyone you support here’s some advice on how to get a handle on your finances during difficult times.
Re-Evaluate Your Budget
The very first thing you want to do when dealing with an emergent situation is to re-evaluate your budget. Whether it’s paying for a large expense (like a replacement furnace or car repair) or having less income (due to job loss, disability, or divorce), you have to be able to fill in the gap financially. To do this, you’ll need to review the income you have coming in or the money you have tucked away for rainy days, determine how much it will cost you to cover the unexpected expense or event, then subtract that from your income source.
Cut Back on Your Spending
If you don’t have enough money to cover the expense or sustain a decent living, it’s time to cut back on your spending. This will free up money in your budget that can be used to ease the financial and emotional pressure. Some common things to cut back on are monthly subscriptions, eating out, cable, cell phone plans, and entertainment. After eliminating unnecessary costs, create a new budget and stick to it.
Sometimes, the unforeseen circumstances are more complicated than simply crunching numbers in your budget. Fortunately, there are several resources that can help you during difficult times. If you are unemployed, applying for unemployment could get you a large percentage of your income to survive until you find a new job.
If you’ve recently divorced or separated from a partner, your lowered income could qualify you for opportunities that include rental or housing assistance, food stamps, and monthly income to care for yourself and your family. If you were injured in an accident at no fault of your own and have been out of work for some time, firms like Pines Salomon Injury Lawyers may be able to help you get compensated for your medical bills and time out of work.
Earn Extra Money
Whether you qualify for federal and state programs or legal assistance or not, having extra money only simplifies things even further. There are so many opportunities to earn extra cash these days. You can test apps, review sites, answer surveys, join a rideshare company, deliver food or groceries, start a blog, become a freelance writer, manage social media, build websites, and so much more. The best part is, all of these opportunities can be done at times that are most convenient for you and most from the comfort of your own home. So, you can work it as a side gig or a full-time business depending on your financial need.
Limit Credit Card and Loan Use
Though the idea of being able to spend money now and pay it back in small installments seems like a lifesaver, it can quickly get out of hand. This is especially true if you don’t have the means to pay back what you spend or borrow in a timely fashion. Charging purchases and applying for loans that you cannot afford to repay will have adverse consequences that can take years to recover from. This can include ruined credit, late fees and penalties, and high amounts of debt. It is better to only use these options if you have the means to repay it in full and on time.
Managing your money on any given day is already a struggle. Yet, when you add an unforeseen circumstance to the mix, it can get ugly. Instead of making a bunch of poor financial decisions that only add to your stress, utilize the advice above to devise a plan that brings you out of this emergent situation a lot easier.