Uncertain financial times can be scary. Whether due to job loss, recession, unexpected illness or economic events beyond your control, there are steps you can take to help you through whatever comes your way.
While no two financial situations will be exactly alike, especially in times of economic uncertainty, here's a list of some things to keep in mind as you assess your plan.
- Understand Your Cash Flow
- Create an Emergency Budget
- Create an Emergency Fund
- Reduce Debt
- Review Your Investments
- Ask for Help
Understand Your Cash Flow
Even before times get hard, familiarize yourself with your daily spending routines. Take a close look at your finances in your online or mobile banking. What percentage of your cash goes toward housing and utilities, and what is funneled toward extras (e.g., daily coffee or eating out?) You might consider making even a small change, such as putting the money you'd normally spend on a daily cup of coffee into a separate savings account.
Additionally, there are many free money management tools and software programs that can help you understand how much money you have coming in and what you spend it on. Many offer visual pie charts and graphs, but a simple Excel spreadsheet with columns for money coming in and money going out can also work just fine, depending on what you prefer.
Create an Emergency Budget
An emergency budget is different from an emergency fund. An emergency budget consists of you taking your everyday budget or basic understanding of what you're spending now,) and identifying things you will be able to cut when times get tight. If you're able to identify items or areas you can cut back on before you're in a much more vulnerable position, the better situated you'll be once times get tight.
Doing this in advance will help you move more seamlessly to life within your emergency budget, if and when the time comes.
- Take a self-paced budgeting course on your time, online: Better Budgeting Webinar
Create an Emergency Fund
An emergency fund is money set aside in a separate account that can only to be used in case of true emergencies. This fund should be truly separate from everyday checking and savings, and not used for impulse buys or large planned expenditures, such as a new washing machine (unless of course that washing machine dies unexpectedly). This account should only be used for unpredictable events, such as job loss, medical bills, or car and home repairs.
Experts often cite the need for emergency funds to see you through three to six months. For most of us, that's a pretty lofty goal, and it may take years to build up that level of savings. Placing a good portion of an annual bonus or tax refund is a good way to kick-start an emergency fund, but simply setting aside a portion of your pay each month is another way to slowly build it up – even if it's just a small amount.
Reducing what you owe now, will free up more savings for when you need it. A helpful place to start is a calculator. Identify everything you own and see how much you might be able to save through lower interest rates or consolidation.
Review Your Investments
If you're close to retirement, you'll likely be paying closer attention to your investments and 401(k) than someone who isn't. Regardless of what stage you're currently in, plan on reviewing your allocations every few years at the very least, and if uncertain economic times appear likely, talk to an expert who can help you move things around.
Schedule time with an investments advisor
Sometimes all the planning in the world can't prevent financial emergencies. If you find yourself unable to make your loan payment or facing significant financial duress, let us know. As a BECU member, you have multiple resources available to you, and we may be able to help. Talk to us before the payments get too large or are missed.
Learn more about member assistance options.
BECU is member-owned and here for you – have any additional questions that we can answer? Reach out any time at 1-800-233-2328
- Managing Your Finances During a Crisis (Webinar)
In an informative video, BECU Financial Educator Stacey Black shares her tips for Managing Your Finances During a Crisis. Use her insights to navigate financial uncertainty
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