Try as we might, sometimes the best laid plans get thrown for a loop. As with anything in life, your finances run the risk of being challenged by sudden emergency pressures that can significantly upset important aspects of your short and long-term planning. However, emergencies like these are not “fatal” if you take the right steps at the right time – usually as soon as you can. Here are four critical actions to take if you’re faced with a sudden financial disruption.
Activate Your Emergency Fund
One of the pillars of financial health that this blog has advocated for a long time – and that you will likely hear from many professional and amateur financial planning advisors – is to build up an emergency fund in a separate savings account that can cover a disruption to your income lasting a number of months. Some advisors will recommend three months, others five: the size of the fund is up to you, but it’s always better to have something there than nothing. In the case of an emergency, this fund will be there for you to help cover your expenses or redirect toward resolving the problems you are facing.
Do A Detailed Review of Your Spending
In the event of a financial emergency, every dollar will count – not just to resolve the problems you have in the short term, but also to structure (or restructure) your anticipated financial needs or goals. It’s the time to do a detailed review of exactly where your money is going right now, so you can pull resources away from non-essential spending and redirect them toward righting the ship. Prioritize your most absolute living essentials and the repayment of any secured debts (like mortgage and car payments.)
Contact Your Creditors
If you owe any money to creditors when a financial emergency strikes, there’s no harm – and no shame – in reaching out to them to explain your situation. Be honest and clear about the future expectations for your accounts, and you may be able to renegotiate terms that allow you to recover from the immediate issues at hand.
Look for Alternative Funding Sources
Lenders like Progressa were built around the principle of being able to assist people who run into the kinds of unexpected financial challenges that require temporary and immediate cash flow. We know that your normal, day-to-day income will likely be able to be sustained after recovery from the emergency, so we are prepared to offer access to loans that can be built into your recovery strategy.