Life is always full of unexpected surprises, and as such, financial emergencies can hit anyone at any time without any fair warning. Finding yourself in the middle of a financial emergency can be pretty bad, especially when you’re not adequately prepared for it. You might suddenly be facing a medical emergency, or end up suddenly losing your job which puts stress on your finances.
Responding to financial emergencies depends on a mix of preparing beforehand and adapting to the situation as it unfolds. If you want to know how to effectively respond to a financial emergency if you ever find yourself in one, here’s everything you need to know how to do so.
When anyone is faced with a financial emergency, panicking is the initial reaction that most people have. But panicking is very harmful in such situations as it clouds your judgment and thought process. On the other hand, if you’re capable of carefully evaluating the situation you easily determine the cause of the emergency and figure out what to do next.
The first thing you need to evaluate is how bad the situation is. Figure out the primary details such as how much money you need to tackle the emergency, evaluate the current situation of your finances, whether you can call in for financial aid from friends and family, how long will this emergency impact your finances in the foreseeable future, etc.
Once you have these things figured out, you will suddenly find things a lot more manageable and easier to control. When you start panicking when faced with financial emergencies you fail to have control over the situation which can lead to making emotional or rushed decisions that you might end up regretting later.
People who have the good habit of saving money on a regular basis usually don’t panic when faced with a financial emergency, as they at the very least have a partial amount of money set aside for such an event. At the very least you should ensure that you have an emergency fund that has at least the equivalent of six-to-nine months of your current monthly earnings in savings.
Contact The Lenders
Financial emergencies are often the first instance many people take a major loan. But if you already have a loan or more than one loan in your name, then alerting your money lenders or credit card company as soon as you’re hit with a financial emergency is the best idea. Moneylenders and credit card companies have an innate interest in helping you tackle the situation.
If you find yourself in a financial emergency, then getting an installment loan from your current money lender or credit card company can be quite easy if you get in touch with them. These loans often come with lowered interest rates keeping your current situation in mind which can be really helpful depending on your situation.
Find Extra Income
Last but not the least, you need to find an extra income source as soon as possible. Taking loans from people to respond to a financial emergency involves repaying them back. If you want the financial pressure off your shoulders, earning more to repay back the loan or financial aid to minimize the chances of racking up ridiculous interest rates is the simplest solution.
If you already have a full-time job you need to find supplementary income that pays more for fewer hours. If you have more practical talents such as photography, video editing, writing, etc, then you can freelance online to earn some extra cash without compromising your lifestyle. You can also check out different hiring industries if there are good opportunities to switch your current job for a better one.
There are certain unemployment benefits for those who don’t have a job, but if you’re already in such a situation then getting a job is doubly important as the federal government’s bare minimum offerings don’t amount to much in most states. You can also open up an online business with a friend or family member to maximize your chances of income if you feel like taking the risk despite the odds.
Don’t Be Scared
No one wants to find themselves caught up in a financial emergency, but the sad reality is that most people who belong to the middle and lower-income groups in society are always at risk of falling into one. So even if you don’t think there’s any chance of you facing a financial emergency preparing way ahead never hurts. That way you’ll always be ready when disaster strikes.