The problem with a financial crisis is that you never know when it is going to strike. This means that you should be prepared when things are going well, so you can recover better when they don’t. There are several ways you can put yourself in the best position to spring back from a personal financial crisis, and these are just a few of them.
Develop a Buffer Zone
One of the simplest things you can do to protect your household finances is to amass a decent level of savings. This way, you don’t have to rely on credit or borrowing should something happen; like you lose your job or you are hit with an unexpected bill. As a general frame of reference, it is worth having at least three months’ worth of living expenses in your savings account. But you can take this up to six if you want to be especially prepared.
Make a Budget
Unfortunately, the vast majority of us simply don’t know where our money is going every month—because we don’t keep track of it. So, now is the time to write down your weekly and monthly expenses. You may well find there are cutbacks you can make if you are spending excessively in some areas. Minimising your monthly outgoings is something you can do regardless of how well things appear to be going at the moment.
Set Up the Right Current and Savings Accounts
In a difficult financial period, you may need to dip into your overdraft. If this should happen, you don’t want to max out on unnecessary fees because your account overcharges you. Similarly, when you put your money into a savings account, you want it to be working as hard as possible for you. You shouldn’t stay loyal to a bank just because you have been using it for a long time, especially if another one is offering you a better deal.
Claim What You’re Entitled To
Perhaps the financial crisis you are going through is due to a personal injury that is not your fault, in which case you may need an accident lawyer. If you are dismissed from your job in a way you believe to be unjust, you may find that you are entitled to some sort of compensation. Ultimately, you have to be the one who is pushing for it as no one else will do it for you.
Look at Alternative Income Streams
The final thing you can do, to make sure you are left in the best financial position in a crisis, is to look at other forms of income. Perhaps you could make money from selling your things online, renting out a second room, or doing some freelance work on the side. Thankfully, the internet has opened up more revenue stream possibilities than ever before, which you can use to your advantage.
Photo by olia danilevich
