If you have ever faced or are currently facing a financial emergency, know that you are not alone. This is because a survey conducted by the Federal Reserve Bank shows that more than 70 million Americans struggle financially each year. Lots of situations can lead to financial stress. If you would like to know how to deal with a financial emergency, read on to find out how you can do so.
- Make a Budget and Stick to It
Creating a budget is very important when it comes to saving money as it will help you avoid overspending. However, sticking to a budget is hard. The good thing is that self-discipline to stick to your budget can help you follow your budget plan. Here are some tips for making a budget:
Track your weekly expenses. Using a credit or debit card can help you get an accurate picture of where your money is going each week. Keep in mind that small purchases such as fast food or morning coffee can add up to a lot of money over time.
Divide your budget into categories such as eating out, entertainment, bills, and groceries.
Create an emergency fund. Start saving money for an emergency or rainy day even if it is a small amount. Remember that a small amount saved over a long period of time can add up and help you when you face a financial emergency.
Gradually, reduce your spending. Limit your eating out to once or twice a week instead of cutting it out entirely.
- Reduce Your Spending
Reducing your spending is another important thing to do when you are faced with a financial emergency. Cutting expenses in a few areas during a financial emergency can provide relief. The following tips will help you reduce your monthly expenses:
Minimize your transportation costs. Carpooling to work with your friends is one of the best ways to save money on transportation. Alternating days with your colleagues will save on gas, reduce wear and tear on the car, and in some cities make use of carpool lanes.
Cut back on your entertainment expenses. If you are paying for cable TV, consider switching to a streaming service like Netflix or Hulu to save money as a streaming service is cheaper than cable. Some networks stream episodes free of charge on their websites.
Cancel unused memberships. If you go to the gym once a week, it may be better to pay whenever you use the gym instead of paying for a gym membership. Doing this can help you save a lot of money. If you would like to know about how to reduce money by reducing expenses, then the 40 ways to save on monthly expenses that Trent Hamm has written will help you.
- Prioritize Your Expenses
Paying your monthly bills is very important. However, this can be difficult when you face a personal financial crisis. The following tips will help you prioritize your expenses and help you get through a personal financial crisis:
Make a list of all your monthly expenses. Listing your expenditures will give you an accurate picture of where your money is currently going each month.
Identify your “must pay” expenses. After making this list, mark those expenditures that should be paid first. Ensure that your rent/mortgage and groceries are at the top of the list. Many utility companies will give you extra time to pay bills so that you can prioritize the more urgent bills.
Contact your creditors. Late payments can hurt your credit score and ignoring the problem makes it worse. Many creditors will extend your payment deadline or allow you to set up a payment plan. For more tools on prioritizing your expenses, take a look at the United Way’s article.
- Reduce Your Debt
If you would like to get out of debt even when you are on a tight budget, then the following tips will help you be debt-free over time:
Create a budget. After writing down all your monthly expenses, subtract that amount from your monthly income. Identify areas you can cut back on to save more money.
Separate your debts from the budget list. Organize your debts from the smallest to the largest balance. Ensure that you know the minimum payments for all your debts.
Use the money you have freed to pay off the smallest debt. For other debts, maintain the minimum payment. After paying off the small debt, use that money on the next loan and then repeat the process.
If you would like more tips for reducing debt, take a look at the Huffington Post article written by Tiffany Allche.
- Seek Financial Help
What if you have exhausted all other options for managing a financial emergency? Ideally, you would use your emergency fund during a financial emergency. However, if you are struggling financially, you need cash urgently. A good option would be to get a loan to help you pay your bills, essentials for the household, and other needs during the financial emergency.
Getting a traditional bank loan may not be an option. A 30-day payday loan like that from Loanza can help you during the financial emergency. With a 50 payday loan, bad credit, can get you through the emergency until you are back on your feet provided you use it responsibly.
