From Ash Cash, personal finance expert, speaker and bestselling author.*
Having savings set aside each month or creating an emergency fund is not only necessary, but vital to the pursuit of financial freedom. Many people already live paycheck to paycheck, so during this economic downturn many are finding a hard time making ends meet. Even those who don’t live paycheck to paycheck are having difficulties during these unprecedented times. So what do you do? The following are 7 tips for getting through this and any unexpected financial emergency:
1. Stay Positive
During a financial emergency the last thing you want to do is to panic. Many people get upset or discouraged when an unexpected financial emergency happens, but reacting in this manner will only stress you out and make matters worse. It is important that you remain calm, cool, and collected so that you have the right mind frame necessary to assess the situation and come up with the best solution to rectifying it.
2. Get Your Financial Life in Order
During a financial emergency, the first thing you will notice besides that money is tight is that things start to come up out of nowhere. Before you can begin to bounce back you must first be aware of where you are financially and put first things first. It is important to recognize your needs and your wants and start to prioritize based on these different categories. You must put your needs first and then focus on your wants. Knowing this in advance will help you decide how to best allocate the funds that you currently have.
3. Cut Your Spending
This should go without saying but sometimes we don’t recognize how a small leak can sink a big ship. Once you have a financial emergency, the odds that you have extra money to spend is very slim so in order to get through your financial emergency and back to a place of financial wholeness you may need to temporarily cut down on your spending. This temporary cutback will allow you to recover from this emergency and give you the necessary funds needed to either build or replenish your emergency fund. Make sure as you’re cutting back on your spending, you keep in mind what we talked about in the previous step which is the difference between your needs and your wants then use this information to set up a budget in which you are paying yourself first.
4. Ask for a Raise
After a financial emergency, it is a good idea to find ways to increase your income. Asking for a raise is one way that can be viable if you follow the right steps. Make sure that your emotions are at bay so that you don’t seem desperate or undeserving but rather be confident, know your value proposition and be ready to articulate why your request should be granted. Remember that no is just yes to a different question, so if you are not granted your raise at first, make sure that you ask and understand what you need to do in order to qualify the next time around.
5. Start a Side-Hustle
Technology has become the great equalizer when it comes to starting a business and building wealth because of the ease in use and access to so many people. When you find yourself in a financial emergency, starting a side hustle is a great way to earn extra income and rebuild your emergency fund. This is a great option because not only will it allow you to make extra money to build your emergency fund, but it also can help you avoid financial emergencies all together in the future. The best part of this option is that you will not owe anyone or be at the mercy of anyone either.
6. Get a Loan
This is my least favorite option because loans come with fees, but given the circumstances, you may find yourself with this as your only immediate option. If you have a financial emergency, getting a loan may be as easy as an online application depending on where you are with your credit. My suggestion would be to stay away from high interest pay day type loans which can start a vicious cycle that is difficult to get out of.
7. Ask for Help
If all else fails, then it may be time to lean on your friends and family and ask for help. This may not be ideal for most, but when facing an emergency, it might be your best option. Borrowing from friends and family can put a strain on the relationship so treat this help with respect and be sure to pay back what you owe as soon as possible.
*The opinions/views expressed by Ash Cash are not considered opinions/views of BMTX, Inc., a wholly owned subsidiary of BM Technologies, Inc. BMTX is not a financial advisor and individuals are urged to obtain and consult their own financial advisors.