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7 Financial Emergencies In Life That You Need To Know How To Deal With

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7 Financial Emergencies In Life That You Need To Know How To Deal With

You may be surprised by some of the categories included, but when it comes to finances and emergencies the biggest thing between the two is the unplanned. When you make goals, you should include contingency plans and always maintain an emergency fund. When life’s twists and turns arrive, you will be better able to enjoy the ride rather than fear the consequences.

Job Loss – the financial emergency we often encounter first

From our first fast food working days to the jobs we plan to continue throughout our careers, job loss is one of the most prevalent emergencies–and losing a job is an emergency everyone should plan for and plan accordingly. Even a 16-year-old working his or her first job should plan to become unemployed. The reasons people lose jobs vary widely, but a simple plan involves saving at least one month’s pay. Depending on the responsibilities the individual has at the time, saving more money may be necessary. It all comes down to planning to cover the most immediate needs because even when working your first job, you need to prepare to pay your bills if you lose the job.

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Marriage – emergencies occur when combining debt

Believe it or not, marriage can be a financial emergency–especially if you marry into debt. You shouldn’t marry for money, but when you and your fiance (or fiancee) acted irresponsibly with money before you decided to partner for life, you need to plan for impending emergency. The best defense against marrying into debt is not to separate. Instead, make a plan to pay down individual debt and create goals for the short and long term. These goals can include things like paying off credit debt or building credit scores in order to get pre-approved for a house.

Divorce – separation costs more than partnering

The last thing lovers want to think about when marrying is divorce, but this financial emergency is a startling reality for many couples. The best way to plan without hurting your partner’s feelings or giving strength to pessimistic thinking, is to take steps to maintain the relationship. In addition to “planning” for divorce, just planning in general for financial emergency will protect you against this one.

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Natural disaster – financial emergencies ahead

How common are tornadoes, earthquakes or floods in your area? When you buy a house or even rent an apartment, keep the possibility of natural disaster in mind and buy homeowner’s insurance or renter’s insurance. Watching the weather and planning for escape never hurts if you live in an area that suffers disasters often, but in addition to an underground shelter, you can shelter your finances by insuring them.

Bankruptcy –  avoid the biggest financial emergency

Bankruptcy is the cold, hard truth for many who take calculated business risks as well as those who simply enjoy their youth too much. When establishing credit, use the limits as a gauge instead of a hard line. If your credit card allows you to charge up to $5,000, you should keep a balance of about $2,000 at most. How much debt you carry is a calculation lenders consider, and many suggest your debt-to-credit limit percentage should be 30 percent or less. In “planning” for the financial emergency of bankruptcy, remember you cannot write off student loan debt. Keep that in mind if you spend your refunds at the bar.

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Retirement – will you have enough?

Most people who join the workforce intend to retire so they can actually enjoy the money they earned working hard at a career for so many years. The sad fact is that for many entering the workforce in 2014 and the years to come, social security may not exist when retirement arrives. If you fit into a category in which you cannot count on retirement or a pension, make sure to consult a financial adviser and create a plan to investing that can help protect your plan to retire. People live longer now than they did in the past, so long-term-care insurance may be a wise investment to protect what savings you accumulate while working.

Death of a spouse – planning for the hard times

Topping the list of things no one wants to think about is losing one of the closest people to you in your entire life. Apart from a parent, who you expect to lose before you die, and a child, who you never hope to lose before you die, a spouse’s death is purely catastrophic. Not only do you suffer emotionally but also financially. You can plan for death in a similar fashion to planning for divorce, by saving money in an emergency or trust fund. You can also take out life insurance to protect against the financial devastation that comes if your spouse’s income provided the majority of household income on which you need to live.

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In all cases of financial emergency, looking into the future and recognizing the potential for disaster is possible. Insuring, saving, and most importantly, planning are your best calls to action in recovering from any financial emergency–now that you know what the big ones are.

Featured photo credit: morguefile via mrg.bz

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Ellen Eldridge

Ellen is a passionate journalist. She shares her everyday life tips at Lifehack.

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Last Updated on January 5, 2022

33 Painless Ways to Save Money Now

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33 Painless Ways to Save Money Now

In a difficult economy, most of us are looking for ways to put more money in our pockets, but we don’t want to feel like misers. We don’t want to drastically alter our lifestyles either. We want it fast and we want it easy. Small savings can add up and big savings can feel like winning the lottery, just without all of the taxes.

Some easy ways to save money:

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  1. Online rebate sites. Many online sites offer cash back rebates and online coupons as well. MrRebates and Ebates are two I like, but there are many others.
  2. Sign up for customer rewards. Many of your favorite stores offer customer rewards on products you already buy. Take advantage.
  3. Switch to compact fluorescent bulbs. The extra cost up front is worth the energy savings later on.
  4. Turn off power strips and electronic devices when not in use.
  5. Buy a programmable thermostat. Set it to lower the heat or raise the AC when you’re not home.
  6. Make coffee at home. Those lattes and caramel macchiatos add up to quite a bit of dough over the year.
  7. Switch banks. Shop around for better interest rates, lower fees and better customer perks. Don’t forget to look for free online banking and ease of depositing and withdrawing money.
  8. Clip coupons: Saving a couple dollars here and there can start to add up. As long as you’re going to buy the products anyway, why not save money?
  9. Pack your lunch. Bring your lunch to work with you a few days a week, rather than buy it.
  10. Eat at home. We’re busier than ever, but cooking meals at home is healthier and much cheaper than take-out or going out. Plus, with all of the freezer and pre-made options, it’s almost as fast as drive-thru.
  11. Have leftovers night. Save your leftovers from a few meals and have a “leftover dinner.” It’s a free meal!
  12. Buy store brands: Many generic or store brands are actually just as good as name brands and considerably cheaper.
  13. Ditch bottled water. Drink tap water if it’s good quality, buy a filter if it’s not. Get 
      a reusable water bottle and refill it.
    • Avoid vending machines: The items are usually over-priced.
    • Take in a matinee. Afternoon movie showings are cheaper than evening times.
    • Re-examine your cable bill. Cancel extra cable or satellite channels you don’t watch. Watch the “on demand” movie purchases too.
    • Use online bill pay. Most banks offer free online bill paying. Save on stamps and checks, and avoid late fees by automating bill payment.
    • Buy frequently used items in bulk. You get a lower per item price and eliminate extra trips to the store later on.
    • Fully utilize the library. Borrowing books is much cheaper than buying them, but in addition to books, most local libraries now lend movies and games.
    • Cancel magazine/newspaper subscriptions: Re-evaluate your subscriptions. Cancel those you don’t read and consider reading some of the other publications online.
    • Get rid of your land-line. Do you really need a land-line anymore if everyone in the family has a cell phone? Alternatively, look into using VOIP or getting a cheaper plan.
    • Better fuel efficiency. Check the air pressure in your tires, keep up with proper auto maintenance, and slow down. Driving even 5MPH slower will result in better fuel mileage.
    • Increase your deductibles. Increasing the insurance deductibles on your homeowners and auto insurance policies lowers premiums significantly. Just make sure you choose a deductible that you can afford should an emergency happen.
    • Choose lunch over dinner. If you do want to dine out occasionally, go at lunchtime rather than dinnertime. Lunch prices are usually cheaper.
    • Buy used:  Whether it’s something small like a vintage dress or a video game or something big like a car or furniture, consider buying it used. You can often get “nearly new” for a fraction of the cost.
    • Stick to the list. Make a list before you go shopping and don’t buy anything that’s not on the list unless it’s a once in a lifetime, killer deal.
    • Tame the impulse. Use a self-enforced waiting period whenever you’re tempted to make an unplanned purchase. Wait for a week and see if you still want the item.
    • Don’t be afraid to ask. Ask to have fees waived, ask for a discount, ask for a lower interest rate on your credit card.
    • Repair rather than replace. You can find directions on how to fix almost anything on the internet. Do your homework, and then bring out your inner handyman.
    • Trade with your neighbors. Borrow tools or equipment that you use infrequently and swap things like babysitting with your neighbors.
    • Swap online. Use sites like PaperBack Swap to trade books, music, and movies with others online. Also, look for local community sites like Freecycle where people give away items they no longer need.
    • Cut back on the meat. Try eating a one or two meatless meals every week or cut back on the meat portions. Meat is usually the most expensive part of the meal.
    • Comparison shop: Get in the habit of checking prices before you buy. See if you can get a better price at another store or look online.

    Remember that saving money is not about being cheap or stingy; it’s about putting money into your bank account rather than giving it to someone else. There are many ways to save money, some you’ve never thought of, and some that won’t appeal or apply to you. Just pick a few of the ideas that sound doable and watch the savings add up. Save big, save small, but save wherever you can.

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    Featured photo credit: Damir Spanic via unsplash.com

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