Unexpected financial emergencies are certainly stressful. Be it a job loss, a pandemic, an accident, or medical expense, a negative change in your financial position makes you restless. However, preparing for such emergencies alleviates the threatening effects of financial emergencies getting out of control. According to financial experts, you should take control of your finances immediately. Identify pressing problems, budget, and set financial priorities before things worsen. Below are a few tips to help you prepare for a looming financial crisis.
1.Find Ways of Earning Extra Cash
Increasing your income is the best way to deal with a financial crisis. Fortunately, there are endless things you can do to earn extra. If your financial crisis results from job loss, the Ontario Works payment calendar can help you find available jobs. Other options for earning extra cash include selling non-essential possessions, babysitting, leveraging bank account and credit card accounts, opening bonuses, and freelancing.
While income from these minor activities may be a fraction of your monthly wage from your primary job, small amounts can quickly add up to significant figures. These activities also have more benefits, such as creating a less cluttered house. You can also create a career from an enjoyable side job.
2. Create a Budget
If you don’t have exact figures for your income and expenditure, you certainly can’t plan for a financial emergency. Creating a budget is the best way to get out of a financial crisis. Without a detailed budget, you can’t determine if you are living below or above your means. While budgeting won’t change your spending habits, it helps you know your financial status and makes it easy to identify where you are spending more.
3. Minimize Your Monthly Bills
Minimizing your monthly expenditure also helps you prepare for a looming financial crisis. Reducing your recurrent monthly expenses, such as rent and electricity bills, makes it less challenging to pay bills when you aren’t in a good financial position. This requires you to evaluate your budget to identify where you could be unnecessarily spending more.
For instance, if you incur monthly fees on your checking accounts, consider switching to banks that offer free checking accounts. Instead of spending $50 monthly on a landline you rarely use, cancel or switch to a low-rate emergency-only landline plan. You should explore many other ways of cutting monthly expenses.
4. Pay Your Credit Card Debt
The interest accumulating from credit card debt can take up significant amounts from your monthly budget. Making an effort to pay down the credit card debt reduces your monthly financial obligations, allowing you to prepare for the crisis better. Avoiding interest payment fees allows you to channel your money towards meaningful expenditures.
5. Find a Better Credit Card Deal
If you have a pending credit card balance, consider transferring to another card with low rates. Less interest rates make it easier to pay off the debt faster and gain some leverage on your monthly budget. However, ensure that whatever you save from low-interest rate cards is more than the balance transfer charges.
While spending is becoming a norm in the current society, you should always be ready for an unexpected financial crisis. Job loss, medical illness or pandemic, accidents, and other financially stressful situations are unpredictable. However, preparing for them can reduce their impact on your finances.