Assuming a family with two working adults, a loss of income can occur when a mom decides to stay home with a new baby, when a spouse dies or leaves the marriage, or when one partner loses a job. Whatever caused a loss of income, planning ahead is the best way to avoid financial ruin.
How to Plan Ahead
Creating an optimal financial situation now will alleviate the stress that is associated with the loss of income. Start this process by paying down and paying off all debt, including your home, if possible. Without debt, your financial future is already looking brighter. After you pay off your debts, it’s time to start tucking away any available income. Create a savings fund with enough money to cover three to six months of living expenses. With these proactive steps to financial security in the present, you will be able to ease into a loss of income situation more easily in the future.
Is It Too Late?
If you’ve been hit with sudden unemployment or loss of income, you may consider it too late to create a better financial situation. With a few money saving techniques, you can adjust your path and move forward with a positive outlook. If you have two vehicles, consider selling one. Not only will you gain the money from the vehicle, but will save insurance and gas costs. Another way to trim your budget is to clip coupons and put the saved grocery money into your housing expense or another fixed expense. Most of us also have budget items such as entertainment or dining out that can be eliminated completely. Until new employment is secured, the “extras” must go.
Simple money-saving ideas, such as couponing or bargain hunting may help, but you may have taken a hit so large that drastic measures must be put into place. You may need to consider downsizing your home to a place that is more affordable on your new income. Housing costs often account for the largest portion of our budgets.
Obviously, the amount of loss that your family has undergone and the reason for the loss will dictate your next steps. As with any other challenge you may face, learn to take it one day at a time. While it is hard not to get overwhelmed, look at this “hiccup” as an opportunity. This loss of income may give you the opportunity to spend more time with family, choose a different career path or procure a better job.
Billeater.com offers money-saving tips and advice for anyone looking to live better on less money.