Manage your finances during an emergency

October 21, 2020
Manage your finances during an emergency

Analyze your situation to understand the scope of the emergency, learn how it impacts your finances and develop a budget management plan to ensure your family’s wellbeing. If you need to make financial decisions during an emergency, consider possible solutions and anticipate their outcome.

Managing your emotions and evaluating the situation carefully will help you make the right decisions and minimize the impact of unexpected events.

Estimate how long an emergency could last and make sure that you have enough money to cover your expenses, including saving some money during that time. In some situations, total or partial loss of income is difficult to estimate. So, when planning for an emergency, assume that it will last an average of 3 to 6 months.

Here are some tips to take control of your finances.

Verify how much money you have and need

  • Take a look at your income and savings to determine how much money you have available to pay your bills and your creditors.
  • Analyze your accounts and set priorities, check how much money you have in cash and in easily accessible accounts, as well as in credit cards.
  • Your home mortgage or monthly rent, as well as other loans and insurance policy payments, should be a priority on your list.

Identify and analyze your expenses

Control essential expenses so you can cover the additional expenses that you may have to incur. Consider the following:

  • Food: Don’t spend more than necessary during the time you estimate the emergency will last. Set a food budget and use a shopping list to avoid overspending.
  • Housing: You must have a safe place for your family, the payment of the mortgage loan or the rent of your home.
  • Health: Set aside funds to cover expenses for medical care.
  • Utilities: Do not increase your usage. If you anticipate that you won’t be able to cover electricity, water or telephone service costs, take the necessary steps so you won’t experience service interruptions.
  • Data services: You will probably need to utilize more online services, so explore your provider’s options and optimize your service plan. Manage the use of electronic equipment to implement better data usage controls.
  • Children’s education: Anticipate expenses associated with your children’s education, materials and equipment needed for remote classes or other aspects.
  • Support for family members: Anticipate expenses required to cover the needs of your parents, siblings or close relatives who need assistance.

Be sure to keep your budget up to date and review it periodically

  • Based on this experience, develop new strategies within your plan and focus on better managing your finances.
  • At home, develop a discipline to maintain or even reduce your usual spending levels.
  • Consider investing in insurance products to cover unexpected expenses involving vehicles, home, health and other aspects of life.

Seek help

  • Do everything possible to keep your accounts current. If you are unable to do so, call your creditors to explain your situation and develop a payment plan.
  • Contact your bank or any other institutions that provide you with financing services.
  • Check if you are eligible to receive assistance funds from federal or state government agencies.
  • Remember to carefully analyze the terms and conditions of these options, as well as their long-term impact. Don’t forget to consider the possibility of getting financial help from a relative.

Consider your ability to continue working

  • Consider the possibility of working from home; explore ways of continuing to contribute to your current job or any other options, even if it means changing roles.

Keep calm. Eventually this challenging period will come to an end and serve as a learning experience to be prepared and redefine or adjust our plans according to changes in our everyday lives.