How to Tackle a Financial Emergency Properly

It is necessary that you make your preparations from the start and make a plan as to how you tackle the particular emergency. Common real life examples include natural disasters, divorce, death, urgent medical situation, emergency house repairs, unemployment from work, utility and other bills, urgent credit repayment or a possible extension in your payday and expenditure payments piling up.

In reply to certain requests, I’ll also elaborate shortly as to why financial emergencies look more than they already are. Lack of coordination and communication among family members, room mates, or people sharing each others expenses is the first thing that may cause these things to have a much larger effect then they are supposed to have. Failure of making difficult financial decisions and making opportunity costs between resources is another thing that might make these things more destructible than they seem. Doubt and insecure feelings can also make a financial urgency tenser. It is the mental stress, combined with the financial pressure that makes these problems unbearable and it’s difficult to handle them. You should try to lessen these barriers when any of such troubles arrive and compete with the problem alone; don’t make it more of a fuss than it already is. You either make the daily necessity expenses out of your income, or handle the financial emergency that has arisen. What should you do in such a situation?

Assess Your Current Position

For proper management of such emergencies, firstly and most importantly you need to evaluate the situation completely that you’re fenced in. Running about here and there will get no issues solved but will only cause more pressure upon you. Sit down, calm yourself, drink water and think about your current circumstance and how will you cope with it.

Think back and look for the reasons that caused this emergency, it is necessary that you know what caused the problem before attempting to solve it. If you don’t get the answer, which probably with many things racing your mind at that time, you won’t, try deciphering the query with a number of possible Sherlock Holmes responses. Is it because your husband died or your got divorced and you are no longer capable of running a home with 2 children? Is it due to your credit problem and your vehicle ceased by the credit company, making your traveling expenses mount?

Create a Plan and Determine Priorities

I suppose that by now you know what caused the problem, but identifying the problem is not going to automatically solve it. You will have to make a step towards rectifying it. Review your current expenditure, budget and make a list of things that you think are okay to be forgone for your spending on other more important utilities. You need to be able to make important decisions and for that, you need to be strong enough in order to go through the process. Many tasks such as important bills, food, shelters, housing, insurance premiums and other come first and have precedence over other tasks. For instance the last credit reimbursement, which could result in you being defaulted if not paid; it’s more important than paying your TV cable bill. You should have no doubts and have complete faith over your decisions, because uncertainty and lack of courage may exert more pressure and create greater problems when you’re incapable of finding the right way to sort out the mess.

Save Your Money

Once you’ve decided over which expenses to prioritize over others, you have to get rid of some of the expenses completely. Many people reject the idea of saving some of their resources for emergency use; they just can’t remove the luxury from their routine life. But strict periods call for strict measures, and saving will help you spend your money responsibly in future. Cut out all expenses that you think shouldn’t be lying in your budget. To distinguish and determine which items should be cut back, imagine that if they’re cut out, is it possible to live without them for some time? If you’re eating out daily, reduce it to once a week and withdraw from any other luxurious expenses; you would better know which expenses don’t belong in your necessity column.

Make the Most of Whatever You Get

Loans, pensions, retirement funds, saving accounts and other mutual investments etc are some of the finances you should turn to as a last resort. If you think this financial emergency is worth it, spend all the money if you have to; funds you’ve saved for your child’s university fees, your sister’s marriage or whatever. These things can be managed later, but your current crisis should be dealt with immediately and it’s not wrong if you use these resources for it. Pensions and retirement funds are for your future life and will make a big drawback if used up now, but handling the urgent situation is more important; this decision is one you will have to make with a strong heart and sheer confidence.

These are some important guidelines for those who wish to resolve the emergency financial crisis and when the paycheck cannot do the work. Immediately reduce your expenses, don’t pre-pay your bills in greater amounts, save things like insurance checks and tax refunds for current expenses, and use emergency funds and loans to pay up the current urgent finance necessary.

Facebook
Twitter
Pinterest