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Nearly everyone has experienced a financial emergency or uncertainty. Life tends to throw curveballs and it can be difficult to have a plan. After all, no one can predict the future with 100% certainty.

However, not everyone is prepared for a financial emergency, whether it be big or small.

Having a plan and being prepared can be extremely helpful in life, especially when it comes to your finances.

A financial emergency or uncertainty may include:

• Losing your job or your hours being cut
• Health issues and medical bills
• A large unexpected house or vehicle expense
• Divorce
• Natural disasters

And so on. There are many different reasons for why you may experience a financial emergency.

Today, I want to talk about various steps you can take to prepare for and handle unexpected financial emergencies.

Below are my tips on how to prepare for and handle unexpected financial emergencies.

1. Be positive.

I say this a lot on Making Sense of Cents, and that is because I truly believe in it. I know it sounds ridiculous to try to tell yourself to “be positive” when things may be rough, but I do think that it makes a world of a difference.

No matter how bad life may seem, I believe that having a positive outlook on everything can truly help a person persevere through tough times.

Being positive can help to give you the motivation and energy to find another option, keep on pushing, move on from your past mistakes, reach for your goals, be happier, and more.

This is something that I always try to keep in mind when things have been extremely tough in the past.

 

2. Build a better budget.

Budgets are great, because they keep you mindful of your income and expenses.

With a monthly budget, you will know exactly how much you can spend in a category each month, how much you have to work with, what spending areas need to be evaluated, among other things.

For Alliant Credit Union members, budgeting and managing for the unexpected is easy with its free Money Management and Budget Tool.

This platform was created to help members successfully manage their money. Alliant’s Money Management and Budgeting Tool shows you the categories where you spend the most (dining out, groceries, travel, etc.), and helps you visualize your cash flow and net worth.

With this free tool, Alliant members can:

• See all of your balances and transactions together in one place. Have a separate 401(k) or credit card with another financial institution? You can add them.
• Understand your spending patterns via the tool’s easy-to-read charts and graphs.

Please visit the iTunes App Store or the Google Play Store to download the Alliant Credit Union App to access the budgeting tool today.

 

3. Find ways to lower your expenses.

When you have an unexpected financial emergency, finding ways to cut your expenses can be a lifesaver. To be able to get through your emergency situation, you will most likely want to find ways to cut back.

This may include doing things such as:

• Negotiating your insurance rate. I recommend simply calling your insurance provider and seeing if anything can be done to get a lower rate. Many times, a simple phone call can save you a lot of money!
• Lower your cell phone plan.
• Sell a vehicle – if things have changed and you no longer need one, then try this.
• Cancel memberships and subscriptions that you’re not getting value out of.
• Look into ways to save money on internet or cable (and perhaps eliminate your cable bill if you can save money doing so).
• Make your food at home.
• Learn how to use coupons better.

I recommend looking at all of your expenses and seeing where you can cut. There are probably many more ways available to you other than just the options listed above.

 

4. Find ways to make extra money.

When you’re in a financial crunch, finding ways to make extra money can help you pay your bills as well as save some money.

And, there are tons of things that you can do to make extra money.

Whether you have just one free hour each day or if you are willing to work 40 to 50 hours a week on top of your full-time job, there are many options for you when it comes to the different ways to earn extra money.

Ideas include:

• Walking dogs
• Answering surveys
• Becoming an Uber driver
• Babysitting
• Cleaning homes
• Finding a part-time job at a store, restaurant, etc.
• Tutoring
• Delivering items
• Write online
• Virtual assisting
• Selling items

Another way to earn extra money is to take a look at your savings account. I personally bank with Alliant Credit Union and their high-yield savings account. With rates that are much higher than the national average and award-winning online banking, Alliant’s high-yield savings accounts help you save time and money.

 

5. Take a look at your emergency fund.

How much money should you have saved for unexpected emergencies?

If you don’t have an emergency fund yet, I recommend creating one as soon as you can.

Emergency funds are always good to have because they give you peace of mind if anything costly were to happen in your life.

Instead of adding to your stress because of whatever has happened, at least you know you can afford to pay your bills.

The recommended emergency fund amount depends on your specific situation. There’s no average emergency fund amount that will work for everyone.

If you don’t have debt, then I usually recommend at least three to six months of expenses. And yes, that’s expenses, not income.

However, some people save as much as a full year of expenses in their emergency fund. A 12-month emergency fund might sound like a lot to you, but it all depends on your situation.

To estimate the amount that you need in your emergency fund, you will want to think about factors such as: the stability of your job, your income compared to your expenses, the things that you own and their costs (such as a house, car, etc.), and your health.

 

6. Check your insurance.

Having insurance in different areas is a way to handle different risks that you may have in your life. So, looking into various insurance policies can be a great way to prepare for future emergencies.

To begin, you will want to think about the different insurance policies that you need, read the fine print on what your insurance covers, and check the coverage amounts.

Different types of insurance may include:

• Homeowners insurance (something to look into is to see if your home insurance also covers things such as earthquakes, severe storms, and flooding)
• Renters insurance
• Car insurance
• Life insurance
• Health insurance

There are many more options too.

 

7. Find help when you need it.

If you happen to be in a financial emergency, please do not be ashamed to find or receive help when you need it. There are many programs that exist for various reasons, that can help you get back on your feet.

This may mean reaching out to a government agency for help, or negotiating with your lenders.

Whatever your case may be, you most likely have options.

Are you ready for an unexpected financial emergency? How do you prepare for financial emergencies?

The post How To Handle Unexpected Financial Emergencies appeared first on Making Sense Of Cents.

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