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Preparing for Financial Setbacks

Page history last edited by Holly Swyers 3 years, 1 month ago

What can you do to be adequately prepared for financial setbacks?

 

Saving 

Creating a savings account or otherwise saving money is a way to defend against financial setbacks and to actually prepare for them before they have arrived. A simple task like this can form the basis of smart personal finance. In this economy, financial setbacks are a common occurrence that will happen at some time or another. Most people face financial issues, but they find them most challenging when they are unprepared. Create a savings plan even if it is only a little bit that you put aside every week or month. That gives you buffer in case of any emergencies like your car breaking down at the worst possible time or any other event that costs more than you have in your budget to cover it. (Teresa Ellison)

 

Emergency Funds

Set up an account where funds will be available for use when there is an emergency. Even though we don't like to plan for such things, having an emergency fund is vital in the event of a personal financial dilemma, such as the loss of a job, a debilitating illness, or a major expense. Put small amounts of your paycheck away until you have 3 months salary (Joyce Fitzgerald). If you have to use it, don’t forget to fill it back up. (Tony Golding)

 

Maintaining and Tracking Payments

Financial planning begins and ends with a realistic budget. Make sure that you have a sense of exactly where your money is going and why you are spending what you are in each category. This tells you where you can tighten your belt, and helps you see when you can recover from a setback by sacrificing social life for a time (Florence Clancy) or saving money buy bringing your lunch to work or making coffee at home (Julia Gordon). 

 

Prioritize bills:

When you are in a time of financial setback, your paycheck only allows you to do so much. Create a pattern or rigid system for paying your bills and keeping your credit stable. Talk to the various institutions to whom you owe money to develop payment plans in order to avoid racking up late fees and penalties that can make it harder to recover from the setback.

 

This page developed from interviews with:

Isaac Davies, Teresa Ellison, Julia Gordon, Tony Golding, Odette James, Florence Clancy, Joyce Fitzgerald

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