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Coping with a financial shock

Coping with a financial shock

An unexpected bill, job loss or a family emergency can all create financial shock. If something unexpected happens and it leaves you struggling to make ends meet these steps can help you get back on track.

Step 1: Start straight away

Sometimes it can be tempting to switch off and ignore the problem, but the longer it is before you take action the harder things may become. Start by considering your options.

If you have an emergency fund, this might be the time to use it. If not, can you make room in your budget, borrow from family or forgo an upcoming expense? Perhaps you could use a combination of these options to find the money you need.

If you have received an unexpectedly large bill, talk to your provider to see if there are payment plan options which could help reduce the shock over a period of months.

If you have no savings or access to funds and need to look at borrowing either through a personal loan or credit card, remember that you’ll have to factor in repayments and interest charged to your budget moving forward.

Step 2: Set yourself a course of action

Now you know what you’ll use to cover the expense, set yourself a course of action. Put together action steps with deadlines to help give you peace of mind and keep you motivated. Include building your savings back up or repaying any debt in your steps.

Share your plan with someone who may be able to give you sound advice, they can also keep you on track by checking in from time to time.

Step 3: Build a buffer

It’s impossible to know when another financial shock will occur but you can be prepared by building yourself a buffer. Once you’re back on your feet start building an emergency fund so you’ve got support should something unexpected happen again.

Read next: How to build an emergency fund

 

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information.