SUMMARY
- Review your savings to understand how long your money will last
- Prioritize essential bills, such as housing, utilities, and basic needs
- Explore relief options by contacting lenders and creditors early
- Cut unnecessary expenses to free up cash flow quickly
- Plan for recovery by building habits that support long-term financial health
When unexpected financial challenges arise, such as job loss, reduced income, or rising expenses, it’s important to take a step back and focus on what matters most. Taking a structured, thoughtful approach can help you stabilize your situation, protect your credit, and regain control of your finances.
Keep reading to learn how to manage your money during a financial crisis, what bills to pay first, and how to survive financially with less income. These steps can help guide you forward to better days. This information is general in nature and not intended as personalized financial advice.
1. Calculate Your Financial Runway
The first step in any financial crisis is to understand your current situation. You don’t have to know your total assets to the penny, but you should have a clear understanding of how much money you have and can easily access, and a clear list of your expenses. Take time to review:
- How much money you have in all your accounts: savings, checking, certificates, 401(k),
- Your monthly expenses
- How much your income is changing
Taking stock helps you determine your financial runway, or how long your money will last. Knowing this gives you a clearer picture of what actions to take next.
2. Prioritize Essential Expenses
When money is tight, not all bills carry the same urgency. Focus on covering your essential living expenses first, including:
- Housing (rent or mortgage)
- Utilities (electricity, water, gas)
- Food and necessities
Other obligations may be flexible, but it’s important to stay informed and communicate with creditors if you need assistance. If you’re able to continue making payments, doing so can help avoid larger financial challenges later.
3. Contact Lenders and Explore Relief Options
If you’re experiencing financial hardship, reach out to your lenders and service providers as soon as possible. Many offer options such as:
- Payment deferrals or extensions
- Loan modifications
- Temporary fee waivers
- Lower interest programs
Proactively communicating can help you find short-term financial relief and protect your credit. Avoid missing payments when possible. If you’re unable to pay, contact your lender immediately to discuss options
If you have a home, vehicle, personal loan, or credit card or line of credit with us, and are experiencing financial hardship, please get in touch with us at 800.877.2345, extension 6633, to discuss options if you are a FIGFCU Member.
4. Reduce Expenses and Increase Cash Flow
At the start of this blog, we talked about understanding your expenses. Hopefully, you made a list. It might surprise you how many things you’re paying for monthly, and how much. Now it’s time to start cutting back on non-essential spending, which can quickly improve your financial situation. Start by:
- Canceling unused subscriptions
- Reducing dining out or entertainment costs
- Shopping more intentionally for groceries
A good place to start cutting is entertainment. If you usually go out to the movies, stop. Public libraries are usually free and give you access to books, movies, and music. Cut streaming services and your gym membership. Our Subscription Manager Tool in our online digital banking platform can help you cut unwanted or unused subscriptions.
Unleash your inner chef. If you’re not doing so already, make more meals at home and eliminate dining out and coffee runs. For many of us, our mobile phones and the internet are necessities, but do you need the fastest internet service available? Is there a more affordable mobile phone plan you can switch to? Even small adjustments can create extra cash flow to cover essential expenses.
5. Protect Your Credit During Financial Hardship
Your credit plays a key role in your financial future. If you’re struggling to make payments:
- Communicate with lenders before missing payments
- Monitor your credit report regularly
- Avoid taking on unnecessary new debt
Taking these steps can help minimize long-term damage while you navigate short-term challenges. Keeping track of your FICO® Score is easy in our online digital banking platform. You may also be able to check your credit score through available tools without impacting your credit, terms may vary by provider.
6. Plan for Better Days: Long-Term Financial Stability
Once you’ve stabilized your financial situation, it’s important to look ahead. Consider:
- Building an emergency fund
- Creating or refining your budget
- Setting realistic financial goals
Financial setbacks are challenging, but they can also be an opportunity to build stronger, more resilient habits. Start by making saving money a priority. If you’re receiving a paycheck, an easy way to get into the habit is to enroll in Direct Deposit. Sign up to allocate a set amount of money every paycheck to go to your emergency fund. Take a moment to reflect on the things you’ve cut. Do you need to add them back into your life and budget? Not doing so can accelerate your savings and even simplify your life. A life with less buying and material goods can foster less stress, more calm, and peace of mind, knowing you have funds to protect you and your family if hard financial times happen again.
Final Thoughts: Take control of your financial future.
Financial challenges can feel overwhelming, but you don’t have to face them alone. Taking small, proactive steps can help you regain a sense of control and move forward with confidence. By understanding your finances, focusing on essential expenses, and seeking financial and emotional support when needed, you can navigate difficult times one step at a time.
If you’re not sure where to begin, our Certified Financial Counselors are here to help. They can provide no-nonsense tips and tactics to help you thrive in challenging times and beyond. Plus, the meetings are free! For a quick check-up on your finances, try our Financial Wellness Check. It only takes about 5 minutes and helps you identify opportunities to reduce costs, improve cash flow, and build a stronger financial foundation so you’re better prepared for whatever comes next. These services are offered by the Credit Union and are optional, with no obligation to use any additional products or services.
Finally, for more resources on saving, budgeting, managing credit, and more, visit our free financial education center or Zogo, a mobile-first way to build your financial skills. Their bite-sized, gamified courses help you earn points redeemable for gift cards. Third-party services are not owned or controlled by the credit union. Participation is optional.
This article is provided for educational purposes only and is not intended as financial or legal advice. Members should contact the Credit Union for guidance regarding their individual situation.
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