Personal Finance Tips – Prepare for a financial emergency

Being prepared for a financial emergency can often be challenging. Many people simply don’t even think about what could happen because they live day in and day out just trying to make it happen. However, having a contingency plan will help prevent problems when something does happen. An emergency can cause a huge problem when you don’t have the financial resources to deal with it.

Few of us think about what would happen if we lost our jobs or suddenly became too ill to work. The thought is simply too awful to contemplate in many cases, especially if we are living paycheck to paycheck with a job as it is.

However, the truth is that financial emergencies happen to almost everyone at some point and they can have a devastating effect on your credit. In fact, most people who declare bankruptcy do so because of a huge financial disaster such as sudden unemployment, huge medical bills, lawsuits, or divorce. Despite this, few people plan for these problems, although they can happen to anyone.

If you want to keep your credit score in good shape, you must know exactly what you are going to do in an emergency. Developing an actual written plan can help by allowing you to take action to save your credit once an emergency situation occurs. Some items that could be included in your financial emergency plan could include:

1) A list of all the assets you could liquidate if you had to.

2) A list of all the extras or luxuries you could cut out of your life immediately if there were a problem (eg, newspaper subscriptions, cable TV, water delivery, Friday nights at the movies).

3) List any resources you have that could help you in an emergency. You probably know a lawyer who deals in the financial aspects of law. Maybe you have insurance that can help you. The employer may offer an end of service gratuity package. Whatever it is, write it down. Keeping a list of these resources will make them easier to access in case of an emergency.

4) Other ways you can get money if you have to – jobs you can do and things you can rent to others.

The whole point is to come up with a plan. You need something in place that you can handle when disaster strikes without falling into a financial crisis. You will be stressed enough by worrying about the emergency that finances don’t need to drag you down either.

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