When Life Hits, What Do You Do?

There are times in our lives when things can get rough in the financial realm. Unexpected expenses arise, and you have to navigate the difficulty of these situations. Ensuring there is enough money in the bank when these expenses arise can be challenging, but when you have the right education and resources available, you can be prepared for these situations.

1. Don’t panic.

The first step when you’re facing a financial emergency is to stay calm. Remember that it will be manageable and that you will be able to overcome it. As difficult as it may seem right now, try to focus on the positive. There is a light at the end of the tunnel, and with a plan and action steps, and controlled budgeting, you will be able to get out of the financial hardship you are facing.

2. Assess the situation.

Once you have reached a calm state of mind, take a step back to evaluate the situation. Make a list of what needs to be done, including even the smaller items that are further in the future. List all of the things that are coming up that you know need to be taken care of. Along with this, you can take some time to evaluate any available money you have at the current time. Maybe this is extra savings, or a bonus you received, etc. This is just to get an idea of what money is available where. You will evaluate it against the budget later.

In mine and my husband’s life, we seem to have seasons where all of a sudden, we have a ton of expenses that come up all at once. So, we list them out all at once. Everything that we know that needs to be taken care of – projects that need to be fixed around the house, all the way to cell phone upgrades upcoming in the next 6 months. You evaluate the overall items that are needing to be taken care of.

3. Prioritize.

Look at your list of things and prioritize them based on urgency. LIst them in order, according to what needs to be taken care of now, in the near future, and what can wait. For example, a car repair would most likely be #1 on the priority, whereas a new computer would probably be #10 on the list.

4. Consult the budget.

At this point, you evaluate the cost of the items in your list against the money you have available in your budget. You can look at your available emergency fund if it is a true emergency. But keep in mind that you will need to replace the emergency fund as quickly as possible after the hardship is over. You can evaluate where there is extra money in your budget – may be a bonus, leftover tax return, savings, etc.

5. Make a plan.

This is where you create your plan of action towards how you will meet the needs of these items. One option may be to pick up extra hours at work to earn overtime pay. You could work a part-time job to earn extra income to pay for the excess. Also at this point, you can re-evaluate your spending, and choose to see where you need to save each month to meet these needs.  In our recent situation, we determined that we will need to save an additional $200 a month to pay for all of our extra items that keep popping up. We had to rework some of our spending numbers, but we made it work so we can pay for these immediate items.

Ultimately, when you are faced with a financial struggle, don’t let it get the best of you. Remember that you are in charge of your finances, and you can overcome the situation with planning and commitment. Don’t panic, don’t get overwhelmed, and create a plan. Then you will be able to overcome any financial obstacle you face.