Life happens. And because of that, you may encounter financial changes at some point in your life. Student loan debt, foreclosure, bankruptcy, and divorce are just a few circumstances that can cause financial duress in your life. And most times, they strike at the most inopportune times in your life.
How can I prepare for financial hardships?
Here are a few ways you can prepare and manage your money now so you can recover faster when hardships strike:
- Live within a budget. The most important thing you can do (regardless of your financial situation) is to live within a budget. That way, you can manage how and where your money goes more effectively. That way, if you’re facing financial hardship, you can immediately adjust (e.g., cut spending) because you know where you stand.
- Create an emergency savings fund. Even if you’re saving a little from each paycheck or each month, that can make a big difference when financial hardship strikes. Consider setting up an automatic deposit from your paycheck to a savings account. Start with as little as $10-$20 and let it grow from there. Just make sure that whatever you decide, you add “save for an emergency” as part of your budget.
- Pay your bills on time. That way, you don’t waste money on late fees, and will free up money to use in other parts of your budget. Plus, you’ll see your credit score increase, which can help you save even more money in the future.
- Review your insurance coverage. It would be best to double-check your insurance every year to ensure you have what you need. Remember, the best time to get insurance is before you need it. And while you’re at it, you can ask about lowering your premium payments.
- Pay down your debt. Debt can be overwhelming, especially in the midst of a crisis. Repay your debts and avoid getting new debt (unless vital). Avoid using payday loans and checking cashing establishments—even if you feel you can’t get a loan elsewhere. And if you feel like the bills are stacking up and you can’t seem to get out from under them, talk to a trusted financial counselor or credit counselor to help.
Like many other things in life, when you prepare today, you can alleviate stress tomorrow. Set money management goals to help you work harder toward a better financial future. And remember, saving what you need for the future will take time and patience.
If you’re facing financial hardship and need help, please don’t hesitate to contact us at 405-755-1000.