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There isn’t a household in the land that never has to deal with a financial emergency. It’s going to
happen at some point – plain and simple. But the emergency itself isn’t the issue – it’s the way that you deal with it that counts. And, like everything in life, your chances of surviving through a nasty bill or a surprise expense is by planning for it in the first place.
In today’s guide, I’m going to run through a few of the key things that should be recognized in your financial emergency plan. Cover all these bases, and you will be able to reduce the impact of even the worst situations imaginable. Let’s get started.
The art of proactivity
OK, so what we are talking about here is the ability to think ahead. And we only have to look to the Boy Scouts of America and their motto to understand what’s needed: be prepared. It is never a good thing to be reactive with finances, and proactivity should be your number one priority. Expect the unexpected, plan ahead for those nightmare days, and you and your bank manager will get along a lot better.
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Preparing for disaster
Are you ready to deal with any financial emergency that life throws at you? I’m not just talking in financial terms, but also about how to react. For instance, do you know how to report identity theft? Is your credit card provider’s theft reporting number stored on your phone? Do you have somewhere the kids can stay in the event of a fire or natural disaster? Is your breakdown cover up to date? All these little things might seem over the top to you right now. But if an incident occurs, you will be glad that you can react, report, and take action right away. And, they will all save you money in the long-term.
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Building an emergency fund
Millions of Americans are only one paycheck away from destitution. For all these people, an accident at work or illness could change their lives irrevocably. It is essential, then, to start building an emergency fund now – not tomorrow. In an ideal world, you will have enough savings to last you for six months. Of course, it can take a while to build up your funds to cover you, but the quicker you start, the better.
Develop an emergency budget
When the nasty stuff hits the fan, you can only guarantee one thing – money will become too tight to mention. It is essential, then, that you can focus on your spending right from off. Create an emergency budget that will remind you of what to spend your money on – and what you can’t afford to forget. For example, while all your debts are important, it’s the secured debts like your mortgage and car payments that you need to prioritize. There are a few basics that you must have on your list. Food, a roof over your head, and utility bills are critical. You also need to be able to afford to get to and from work – or your problems will get worse.
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Create a Help List
Is there anyone you can rely on if times get tough too quickly to handle? A family member or friend migh
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t be able to help you out – and don’t forget; it’s OK to ask for help. One good way of approaching this is to create a Help List. Speak to your friends and chat about what would happen in either of your families suffered from an emergency. Are you in a position where you could help each o
ther out? It’s also worth finding out about local charitable help. You can receive assistance for all kinds of things, from transportation through to medical debts. Take a look around and see what you can find in your area. Right now, you might not need any of this help. But, if you are one of the millions who are only one paycheck away from disaster, there is no guarantee you will never use them.
Speed is of the essence
When a building goes up in flames, the people who get up and move fast are often the ones that get away with the least damage. And the same principle applies to your finances. In the event of an emergency, the quicker you take action, the faster you will find your financial feet again. So, always be prepared. If you know what to do before an event happens, it will be so much easier on you, your family, and your finances. Good luck – and let me know your thoughts i
n the comments!
