Preparing for a Financial Setback
July 28, 2020 by Hunter Swanson
If 2020 has proven anything, it’s that life can throw some crazy curveballs. We may not be able to predict the next major impact on our financial wellness, but with a little planning and a positive attitude we can be ready for it. So, take a deep breath, relax, and review the following tips to help you prepare if you happen to have a financial setback.
- Don’t procrastinate. If you’re lucky enough to know when the setback is going to hit you, take stock of what you can do now to avoid being hit with a financial shock later.
- Put money aside in a savings account for the occasion. Putting money aside on a regular basis to build an emergency fund might be one of the best plans you can make.
- Start thinking about other ways to generate income. Maybe now is a good time to sell some collectibles or other things. You’d be surprised how much money you could make holding a garage sale!
- If you haven’t reviewed your goals, assets, income, expenses, and debt in a while (or ever) now is the time to do it. Sit down and do the numbers crunch. It is worth the effort. Our financial education partners at BALANCE have debt and budget counselors that can help.
- Once you’ve done that, take a good, hard look at it. Are there areas you can reduce or cut? This is your chance to make positive financial decisions about what you may want to change.
- Track your expenses. By plugging the holes now, you can save more efficiently for the times when you will really need it. If you login to Online Banking, the MX Money Management tool is a great place to start.
- What are you buying – Do you need it now? Can you get it for less somewhere else? Asking yourself these questions will help you become a savvy shopper in both flush and tough times.
- What about entertainment? Are you using all those channels or streaming services? Every little bit does add up.
- Try cooking instead of going out – even fast food can cost more than a home-cooked meal.
- Save the Earth and money at the same time. Look to reusables, such as sponges instead of paper towels or multipurpose cleaners instead of specialized ones.
- If you have credit card debt, check out the interest rate you’re paying. Is it in the teens or 20% range? That’s considered high. If so, it may be time to make some changes:
- Give your current creditors a chance. If you have been a good customer, try asking for an interest rate reduction. A five-minute phone call can make for huge savings.
- Consider transferring your balances to lower interest cards or those with extremely low “teaser” rates if you think you can pay them off before the “regular” rate kicks back in.
- Credit card debt is expensive. And frustrating. If you feel you have been treading water or watching the balance grow rather than plunge, go back to your budget and consider making changes. A $2,000 balance with a 19% interest rate will take 30 years to repay if you just make the minimum payment – and that’s if you never make another purchase on it!
- Try talking to a debt and budgeting counselor with our financial education partner BALANCE Pro if you are in need of help.
Finally, remember that planning ahead is key to being prepared for tomorrow. You can do it!
BALANCE is an amazing resource for all our members to utilize when taking on life's milestones. With trusted guidance available for free, they are ready to help everyone on the path to financial wellness. This article and many more can be found on their website: balancepro.org.