July 8, 2020
Even the most careful budgeter can come upon hard times. Things like unexpected medical expenses, broken appliances, flat tires, and unemployment can quickly wipe our emergency funds and other savings. Don’t worry! Emergencies like these are the exact reason to have an emergency fund. No matter where you’re at, here’s how to rebuild after a crisis drains your savings.
Did you lose your source of income? Did you have an unexpected expense from an accident? Figure out what went wrong and decide what your next step should be. If you lost your job your first plan of action should be finding a new source of income. Unemployment programs or temporary positions can keep you afloat until you can find something more permanent. Any income helps pay the bills you need for survival.
The best way to come back from a financial emergency is to rebuild slowly. Think of it like a physical injury. If you broke your leg, you wouldn’t be able to jump right back into the game. You would start off slowly, rebuilding strength gradually until you’re able to run again. Cut back on expenses that aren’t necessary. It may seem extreme to give up your morning coffee stop, but every bit counts when rebuilding your finances.
Put together a plan of action. Use a budget to manage where your money goes instead of wondering where it went when you need to pay the rent. Track your expenses and see where you typically spend your money. Prioritize where you want to spend your income next month. To rebuild your savings, you will need to put money into it.
Once you have a plan, get started! Earn what you can, save what you can, and sell what you can. If your basic expenses are larger than your income, find an additional stream of income. Start sorting through your house and see what you can try to sell for a little extra cash. Maybe try a yard sale or selling off the RV you’ve only used twice. If you have a special talent like sewing or carpentry, try selling those services. If your rent is too high, find a roommate or downsize to a cheaper place. Do what you can to increase your income and rebuild that savings account!
The best way to build wealth is to spend less than you earn. You may have seen your savings grow, and you’re paying off the bills, but living as cheap as you can isn’t sustainable. Find ways to increase your income to save more, start investing, and prepare for retirement. You may need to learn to ask for a raise, find a better job, or start a side hustle. Stabilize your financial situation by increasing the gap between spending and earning. You don’t want to waste the effort to rebuild your savings just to fall back into it again when another emergency hits. Protect yourself and your family by building and maintaining a stable financial foundation.
Rebuilding your savings can require sacrifice and make things feel tight in the moment. But remember what you put back now can help you weather financial storms in the future much more easily. Contact a Personal Banker at your local branch if you need help making a plan to rebuild your savings.