One of the last things we anticipate in our “Empty Nest” years is having our personal financial world crash down on us. Unfortunately, it can happen. People can lose their jobs, face huge medical costs, have stocks/investments drop significantly and other financial catastrophes. That’s the bad news. Fortunately, there is some good news. There are things you can do to help you survive and recover from a financial setback. It’s important – even if you’re in a financially secure state today – to know and understand these tips, and be mentally and fiscally prepared for a quick response should you ever encounter a serious financial setback.
TIP 1: Track your money and re-evaluate your expenses.
Itemize how much money you are spending and what you are spending it on. Break it down into categories, such as mortgage, utilities, payments, food, entertainment, etc., and add it up at the end of the month. This will help give you a true picture as to where your money is going. If there isn’t enough money to pay your monthly bills and expenses, this is your first warning you could be facing financial difficulty.
In today’s world, we tend to think of many of our expenses as “necessities,” when in reality, they’re actually luxuries – things we can live without. Cut out some expenses by reducing your cell phone, internet, cable or satellite TV plans. Other tactics that are helpful include setting up billing for your utilities, joining a car pool and reducing your entertainment and miscellaneous expenses. Shop for what you need not for what you want. Look for sales. No impulse buying. Set up a realistic budget and stick to it!
TIP 2: Look at your assets.
Chances are, you probably own some items you no longer use that can be sold to help build up your cash. For example, if you own things like a boat, jewelry, tools, household items, computer or even smaller-value items, look for safe, reputable sites to sell these items. Also, check for unused equity you may have, perhaps in your home or vehicle that can be used to consolidate some of the debt. The funds you receive can be a huge step toward rebuilding your financial world.
TIP 3: Consider a second job.
One of the best approaches to achieving financial recovery is to earn more. So if possible, consider getting a second, part-time job that will add to your income, help you pay bills and get you back on your feet.
Tip 4: Seek financial assistance.
When you’re in a financial crisis, it’s critical to meet with a professional financial expert. They can help you set up budgets, look at alternative ways to handle your situation and help manage your investments.
Tip 5: Build an emergency fund.
One of the best strategies for avoiding – and recovering – from financial setbacks is to set up and regularly add to an emergency fund. Even if you’re in a serious financial situation, make sure you “pay yourself first” by adding cash to your emergency fund. Three to six month’s salary is a good amount to have in an emergency fund in case of loss of employment or medical emergencies. Re-evaluate each year and figure in inflation costs. This approach helps reduce stress, and helps you have cash on hand no matter how bad things get.
Chances are you won’t go through a financial crisis. However, it’s always good to know how to avoid or handle a bad situation, and these tips are the most important. Share this with your family and friends – it can lead to a brighter future!