Dictionary.com defines emergency as a state, especially of need for help or relief, created by some unexpected event: a financial emergency. It is unlikely that you can foresee or foil job loss, illness or ill-fated happenings, which can upset your finances. Losing your job can be disastrous if you are not prepared. For those that carry a lot of debt the smallest trouble can turn into a crisis. However, you do have control over how to survive a financial crisis. Here are a few simple ways to be prepared for a financial emergency.
- Set aside three to six months of funds. For an emergency like losing your job, it takes that long to get back into the job market. You might say, “I don’t have any extra money to save” but in reality most people can find an extra $20 – $50 per pay to set aside. Any savings is better than nothing.
- Conduct your own personal financial audit. Determine where your money is going then examine where you may be able to save or cut back. Maybe a more reasonable mode of transportation will suffice if that luxury SUV is taking up a big portion of your monthly expenses.
- Cut back on your weekly/monthly bills. Can you cut back on your grocery bills by planning your meals ahead of time instead of making impulse purchases when you are in the grocery store? Examine all of your household expenses and ask yourself, “is the premium package really necessary when the basic package will do?”
- Use credit cards for emergencies only. Put the credit cards away and stop buying on credit. Do what our grandparents did. If you do not have the cash to buy it then save for it first. If you still want it once you have saved for it, then you have earned it and will avoid paying interest.
- Seek help. Do not be embarrassed or too proud. If your debt seems to be climbing out of control then seek advice. You do not have to be on the verge of bankruptcy to get good financial advice from a Licensed Insolvency Trustee or your personal financial planner.
For more tips to surviving a financial crisis or to set up a free consultation with a Licensed Trustee to review how to get yourself out of financial hardship, call Borsellino Consulting today!