The thought of another major financial crisis, such as job loss or an accident, can make anyone stressed out, in already heated times. However, the thought of something out of your control happening might not seem as threatening if you can prepare correctly. There are several things you can do to prepare for a potential crisis.
Cut Down Your Monthly Spending
It’s a good idea to stop purchasing anything except the necessitates, especially if you need to save more money. If you get the cost of living down as low as possible, you won’t find it as hard to pay the bills when you don’t have as much money. Look over the budget to see where you are overspending.
For instance, if you have a landline and a cell phone, you might decide to cancel the landline. If most people in the household already have a phone, it could be cheaper to acquire a pay as you go phone for emergency use only. Another way you can trim down your expenses is to take care of existing debt. For example, if you have student loans, you might consider refinancing them with the help of a private lender. A student loan refinance might be just what you need to cut down the interest rates or extend the amount of time you have to pay back your debt.
Maximize Liquid Savings
If you are facing a crisis, your savings and checking accounts, as well as other short-term savings, will help you out the most. It is important to turn to these things first since they don’t have fluctuating value. Other investments, such as stocks or index funds, tend to have more of a fluctuating value. When you have enough funds in a savings or checking account, you can take it out any time you need it without hurting yourself financially. And unlike certain types of accounts, like retirement, you don’t have to worry about penalties for withdrawing early.
Manage Your Bills Carefully
There is no reason why you should face late charges when you can simply pay the bills on time. And if you lose your job or face an unexpected, large bills, it is even more important to be careful. Staying organized can help you avoid forgetting to pay something. Even if you pay your credit card late just once a month, you could lose several hundred dollars each year.
Go over bills a few times each month to make sure you are not missing anything. Check your accounts as well, to make sure everything looks in order. Whenever possible, try to automate payments and set them to go out a little earlier to ensure it arrives on time. If you can’t keep track of everything, you might want to create a spreadsheet. Once that is set up, you can use it as a tracker to stay on top of accounts. In some cases, you might be able to combine or even close some of the accounts. That way, there will be less to track.