Steps to Take if You’ve Suffered a Financial Blow

If you’ve suffered a financial blow recently, you’re not alone. There is a lot of upheaval going on in the world right now. Many people are finding themselves out of a job, or unable to work right now, or unsure whether they will have a source of income after things have settled down.

Here are some steps you can take to safeguard your money:

DO: Apply for Unemployment

If you did lose your job, file for unemployment as soon as possible if you are eligible. 

 And if you’ve lost benefits as well, apply for COBRA right away to continue your health coverage. It’s vital that you and your family continue to have health insurance, so don’t delay if you will lose your health insurance soon.

DON’T: Panic About Where Your 401(k) is Located

If you did lose your job, don’t worry immediately about your 401(k). You can wait 3-6 months to determine where it will go next. And you might want to wait anyway, because the best place for your 401(k) might not be the best place down the line.

The exception to this is if you had less than $5,000 in that account, in which case you may be receiving a check in the mail. If this happens, make sure you roll that money into another retirement plan as soon as possible. 

DO: Triage Your Budget after a Financial Blow

Whether you keep a household budget or not – and you definitely should – it’s time for an overhaul. First look at what is essential, and cut out excess. Then, plan for different scenarios. 

What would happen if you or your spouse lost a job? Or had hours temporarily cut? Are you spending more or less on things like food and childcare? Assume you’ll suffer a financial blow at some point, and prepare for it.

You may need to update your budget frequently as things change, so keep a close eye on your spending.

Coming up with a plan for different scenarios will help you feel more in control in a very uncertain time, and this is when it matters most to stick to a budget. 

DON’T: Overlook Your Spending

These are not normal times. Even if your income is unaffected, you should still take a look at how you are spending.

Why? Because you could still be affected down the road, and it would be good to at least be aware of where you might be spending too much.

You could also look at where you shop, and change your spending habits to support more local businesses instead of defaulting to Amazon or big-box stores.

DO: Pick up part-time work

If you need to supplement your income, there are opportunities to do that, even if you’re stuck at home. Here are some part-time work ideas:

-Offer your skills as a freelancer, in fields like writing, graphic design, consulting, etc.

-Offer to babysit for a friend who has to work outside the home

-Apply for a position in the areas that desperately need help, like grocery stores and delivery services like Uber and Amazon

-Sell items you create or no longer need

DO: Tap Your Emergency Savings

Dip into your emergency savings if you need to. After all, times like these are why we have emergency funds. So don’t feel guilty if you need to use it.

DON’T: Max Out Your Credit Cards

High-interest credit cards should be a last resort if you’re running low on cash. Even if you expect your financial situation to rebound quickly, remember that we are in unknown territory right now. There is no telling what next month, or even next week, could look like. 

So avoid using your credit cards as a lifeline unless you have no other choice.

DO: Call on Friends and Family

Everyone is affected by this pandemic in some way. So if you suddenly find yourself in a tight spot, let friends and family know you are struggling. It’s better to get a lower interest loan from someone you know than to use a high-interest loan or credit card you’ll be paying off for years. 

DON’T: Wait to Reach Out to Lenders

Many lenders are offering relief for mortgages, student loans and car loans. Make sure you know what your lenders are offering, and how you can receive updates as soon as they happen. 

Again, things are changing quickly right now. So be sure you know how to get information as soon as it’s available.

Here are a couple of resources offering up-to-date information about student loan relief and mortgage relief.

DO: Declutter and Get Your Finances in Order

There has never been a better time to get your money squared away. You might have extra time on your hands right now, so take a little bit of that to really go through your subscriptions, important documents, upcoming expenses, etc. 

Read my article all about decluttering to save money here.

Above all, try to stay calm, look for solutions, and use every possible resource you have to ride out this global crisis. Cultivating strong habits and resilience right now will help you strengthen your finances and systems even better when things settle down again.

About Your Richest Life

At Your Richest Life, Katie Brewer, CFP®, believes everyone should have access to financial resources and coaching. For more information on the services offered, contact Katie today.

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