October 1, 2020
There are many circumstances that can lead to financial insecurity. The loss of a job, a sudden illness or an unexpected debt can stretch a family’s budget to the breaking point. When you enter a period of personal financial crisis, it can be extremely stressful. One of the ways to take control is to establish priorities and make certain you pay for what you truly need before anything else.
Paying for priorities
When you are financially healthy, you can indulge in relaxed spending habits. Some people are not used to keeping a strict budget and tend to spend money whenever it feels right. When you are easily covering your needs, you can spend money on things that are optional.
During a period of financial insecurity, it is time to reevaluate that strategy. Most people need to deny some of their optional expenses in order to pay for the things they need such as housing, food, medical costs and clothing. If spending habits do not change, a temporary period of financial strain can lead to a much longer period of digging out of debt.
How do you decide what is essential?
A good deal of spending is habitual. In fact, many people pay for services by allowing them to automatically withdraw money from their funds. As you look at your monthly expenses, there are several questions you can ask yourself in deciding where to make cuts.
- Can you survive without it? If your quality of life will greatly suffer without the expense, it is probably a necessity that you should pay for. You definitely want to make your mortgage or rent payments on time. You can find options to replace your favorite streaming service for a couple of months.
- Is it necessary to make a living? Obtaining income is critical during a personal budget crisis. If you are able to increase your income by participating in the gig economy, it may mean maintaining a well-functioning vehicle for driving services or a high-speed internet connection for online work. The need for the income necessitates the expense.
- Is there a less expensive way to achieve the same result? Many people spend a fair amount of money each week going out to eat. While prepared food is more convenient, it costs more than the food you can buy at the grocery store. During a financial struggle, going to a restaurant may have to be reserved for special occasions.
How can you prepare for the unexpected?
Financial challenges are much less stressful if you have done some preparation. During times when you are not struggling, it is a good idea to set some money aside in an emergency fund. If you have gathered the resources to go for a few months without a salary, you can focus on getting better or finding your next job without worrying about this month’s rent. By developing clear priorities before and during a financial crisis, you can weather the storm and come out all right on the other side.