• Email Page
• Share Page
• Comments(1)
• Recommend (312)
• Print

Handling the Unexpected

There's nothing harder to plan for than the unexpected. Many times the emotional impact is hard enough to handle without financial uncertainties. The key to successfully surviving these life-changing events, financially at least, is to anticipate hard times, shore up your financial situation now, and give yourself some breathing room.

Build an emergency fund to get you through the rough times. You'll need three months' living expenses as a minimum, more if your industry is subject to prolonged layoffs.

Set money aside every month. But unlike retirement savings, keep your emergency savings fairly liquid, in a savings account or a money market fund. Hopefully you will never need it. But if you do, you'll be glad it's there.

A New Financial Picture
Once the immediate financial matters are taken care of, you need to settle into your new financial situation. Creating a budget is the first step toward financial security.

Create a budget by writing down your expenses to find out where your money is going. Pull out your credit card bills and bank statements from past years as guides to your spending habits. Then estimate how much your new bills will be. Be sure to include expenses for entertainment, clothing and other major expense categories. Put in some money for savings. It may take several months to fine-tune your budget.

Now estimate your monthly income. Don't include potential income - only income you are sure to receive. Make sure you know which benefits you will be receiving and for how long.

Check your budgeted expenses against your income. If you have extra income, you should try to save even more. If your expenses are greater than your income, you need to trim your expenses until they match your income.