A financial crisis can hit at the most unexpected time. Losing your job or facing a sudden medical emergency can have a huge impact on your finances. Even if you’re at financial rock bottom, there’s always a way to work your way back up.
If you’re in a financial situation that you don’t know how to get out of, you’ve likely overly stressed, anxious, and confused as to how to recoup. But by taking the right steps, you can overcome a financial crisis.
Here’s what you need to do if you’re stuck between a financial rock and a hard place, no matter where you are; from Georgia all the way to the west coast and beyond.
Create a Budget
Not having a budget makes it even harder to get through a financial crisis. One of the best ways to work through financial hardship is to create a budget. It’s ideal to create a monthly budget so that you can balance your income versus your expenses. With a budget, you can prioritize your spending and figure out ways you can save money.
When creating your budget, track your expenses for a month. Make note of where you’re spending your money and how much you’re spending. You can use a mobile app like Mint or You Need a Budget to more conveniently track your money.
Once you can see where your money is going, you can identify areas where you can save. Common ways to save money include:
- Not eating out as often
- Using public transportation
- Packing meals to bring to work
- Spending less on entertainment
Cutting back on your spending doesn’t have to make life boring. It just means that you’ll be more careful about where you spend your hard-earned dollars. With the money you save each month, you can put more cash away into savings or your emergency fund.
Increase Your Income
During a financial crisis, finding ways to make quick money can help to offset some of the financial burdens that you’re facing. The internet and mobile apps have introduced all sorts of ways for everyday people to make money.
If you’ve lost your job but have a car, you can make money as an Uber or Lyft driver. With a computer and an internet connection, you become a content writer or sell unwanted items on eBay or OfferUp.
Even if you only make a couple of hundred dollars, any income is beneficial during a financial crisis. Making just enough to cover your bills eliminates the stress of having to make a late payment and impacting your credit score.
Be Better Prepared
While you can’t predict the loss of a job or an expensive life change, you can better prepare yourself to make it through this type of situation if it happens again. One of the best things you can do in order to make it through a financial crisis in the future is to be prepared for it.
This means not only funding your savings account but also building an emergency fund. This fund should have no less than three months’ worth of expenses. This way, if you experience a loss of income or have to wipe out your savings to cover an unexpected expense, you have money that was set aside for that exact situation.
Another way to prepare for a financial crisis is to work with a financial advisor. A financial pro will work with you to look at your budget and figure out ways to make your money stretch further. A financial advisor will also help you with investing your funds so that you can make money by simply having money.
Finding a financial advisor is super easy. In fact, you can compare financial advisors on Carefulcents.com.
Call Your Lenders and Creditors
If you’re not making money or have had to deplete all of the money you had, it can be impossible to pay bills; but paying a bill late can result in a hefty late fee. Late payments can also affect your credit score.
The good news is that if you’re in good standing with your lenders and creditors, you may be able to get a one-time exception. Some lenders are willing to push back your due date or allow you to make smaller payments until you’ve made the entire payment.
Don’t be afraid to explain your financial situation. Be honest with your creditors, and you may be surprised at how willing they are to help you.
Avoiding a financial crisis isn’t always possible. If you’re in a financial bind and don’t know how to get out of it, there are many steps you can take. Keep these options in mind so that you can come out on the other side of this crisis while also being better prepared in the future.