You must have heard that one should expect the best but prepare for the worst. No one knows when they will have to go through financial crisis in their lives. But the most important thing is to prevail over them and get your life back on track.
Even the thought of being hit by a miserable incident that can affect your finances badly can be a nightmare. Some of the major tragic events include a job loss, medical emergency, or a pandemic etc.
Well, financial crisis occur in cycles and thus one should think more of it as ‘when’ and not as ‘if’. But before that happens, here are a few things that one should consider:
- Do not make yourself fall into bad debt (Bad debt is defined as a loan that keeps on increasing, avoid buying expensive assets on loan, going on extravagant holidays, or spending money where you don’t have to)
- You should have a liquid emergency fund (6 to 9 months expenses)
- Do not invest the money you need in the market (Basically, the need here means that you should be able to handle everything even if you do not have this money with you at least for two years)
The strategy of handling a financial crisis is divided into two ways:
- Proactive – The things that you should do before the crisis happens.
- Reactive – The things that you can do after the happening of a crisis.
Let’s talk about the proactive activities that you should follow to protect yourself from economical problems. You need to take care of your expenses and here are the tips that will motivate you to achieve that.
Know The Problems
The first and foremost step is to stay calm and evaluate the situation. Before finding the solution you should identify the problem. Know if the problem is a one-time incident, for instance, not getting a salary due to a payroll mistake or a long-term problem such as job loss. The importance of identifying the problems is to find a permanent solution. Well, what would you prefer, placing a bucket under a leaky tap or getting it fixed permanently?
Make A Monthly Or Weekly Budget
You should know how much money is coming in and going out every month. This way you’ll get to know if you are currently overspending or living under your means. Budget planning is considered one of the best ways to deal with a financial crisis. A budget is a plan consisting of activities where you need to spend money and how much spending would be enough. This can be made weekly, monthly, or yearly as per your preference. This will help you track your expenses i.e. where and how much you are spending. This way you’ll get to know the areas from where you can save for emergency conditions.
Increase Your Liquid Savings
Many financial experts suggest that one should have money in your stash that you would need for your six months expenses. If you do not have one, you should start saving money for emergencies. If you will not do it, you will find yourself in a debt or will have to sell your assets.
Prepare Yourself To Limit Your Monthly Bills
You may not be doing it now but you should prepare yourself to do it in the coming time. It would be good if you start cutting out anything that is not required. If you keep your expenses low, you’ll have less difficulty in paying your monthly bills. For instance, if you have a habit of letting the air conditioner or heater on when you are out, you should stop doing this. This way you can limit your monthly bills and use that money on something else e.g. getting insurance.
Track Progress Of Your Activities
Anything which we plan and execute must be tracked to know the progress that we made. In the same way, if you make a plan and start walking on that road to achieving it, you should wait for a few minutes to check your progress. You should assess the plan and make sure if you are progressing and moving towards your goal. One should be open to new possibilities and new modifications needed.
Unexpected financial challenges are like uninvited guests and can come at the most inopportune moments. The key to tackle these problems is to be flexible and open to new opportunities.
Save Money From Wherever You Can
It’s hard to prioritize the list of activities for which you want to save first and last. But all you know is that you have some dreams or necessities that you need money for. For example, you may have dreamed of going to an adventurous place or you want to save money for your child’s education. Well, all you have to do is make a list of activities from where you can save money. Don’t forget that there are several options by which you can make extra money. Some of the options are freelancing, babysitting, selling possessions you no longer need or doing a second job. These activities may get you a little money but even small amounts can add a lot to your savings.
Now let’s talk about the reactive actions that you can take.
If you get hit by financial problems, you need not worry and must be patience. You can opt for bad credit car loans that can be highly useful at such moments. You can apply for this loan even if you have a bad credit score or if you are in between jobs. With this loan, you can get money immediately and you don’t even have to surrender your vehicle to the lending institution. All you need to do is just apply for the loan and submit the necessary documents. You can apply by contacting the lender directly or by filling out the basic application form available on the website. After the vehicle inspection and getting approval, you can collect the money and drive away with your vehicle.
Well, life is unpredictable and no one knows what will happen in the very next moment. But if there is anything that one can do to save themselves from the financial crisis is to be prepared and careful. With accurate preparation and enough savings, you can easily prevail over the financial crunch.