Are You Ready for A Financial Emergency? Here’s What to Do Now.
Hospital bills, divorce, car repair, how do we address items when they come to us as a financial surprise? Can we plan for an emergency in advance when we don’t anticipate certain economic events? The answer is yes, to a certain extent.
Sometimes you come to a space where surprises in your financial lives happen. From a planning standpoint, you want to be mindful to maintain financial flexibility. This is one of the bedrock principles at North Main Financial, helping our clients maintain financial flexibility. That will mean different things to different people because everyone’s situation is unique. However, we encourage our clients to keep these three points in mind when preparing for the future.
Maintain a healthy cash reserve.
This may seem elementary but maintaining a healthy cash reserve is extremely helpful when an emergency arises. Call it an emergency fund or savings account. Whatever you call it, make sure you have a good amount of cash available should you need it. Not just for the things you anticipate but for what you don’t expect. This is number one on our list because when you encounter unexpected problems, you have the resources to address them. The last thing you want to do is put unforeseen expenses on a high-interest rate credit card or must take out a personal loan. Having cash on hand will help you not to incur additional costs. As for the amount, that will depend on your specific situation.
Live below your means.
This is not a statement people like to hear, but it’s an easy way to build up the emergency or savings account mentioned above. Believe it or not, we have this conversation with some regularity. If you spend more than you earn, you’re putting yourself in a bad spot. You’ll constantly be behind the eight ball and in debt. Instead, put together a budget to see how much you’re earning and spending. Then spend less than you’re making. You always want to have that gap, so you have money going back into your savings account. This helps you maintain flexibility.
Look at opportunities.
This point is unique to the time we are sitting in at the writing of this blog. Because of how the job market is right now, look at opportunities. We’re not suggesting you change your job. However, there can be more opportunities in this tight labor market than in a “normalized” market may not be available to you. No one likes change, and again, we’re not telling you to change jobs. We’re simply telling you to be aware of what’s happening around you. From a professional and financial standpoint, there may be opportunities out there that can be better than the space you’re in today.
The bottom line, have a plan going forward. This is where a financial planner can help. They can look at where you are now financially and help you plan for significant economic events that might arise, like taxes, insurance, and emergencies. If you encounter a financial surprise, you want to make sure that you get re-grounded as quickly as possible and start thinking about what your space will look like going forward. Again, a financial planner can help guide you through this process to help you meet your specific financial goals.
If you have questions about your financial space, give us a call at (704) 987-1425 or visit us at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation.
You may also be interested in the following articles:
A Few Simple Ways to Be Proactive About Reducing Your Taxable Income
There Is More Than One Way to Generate Retirement Income
These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.
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