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Emergency expenses such as a loss in income, a household repair, or a major medical bill can put a significant financial burden on you and your family. Here are a few steps you can take to balance your budget in the event of an unforeseen expense:
If your emergency savings won’t cover the expense, take a close look at your other savings. If you have money set aside in a savings or money market account, this may be the time to tap those funds. However, if your money is tied up in a certificate of deposit (CD), retirement account, or investment, there may be penalties for withdrawing those funds.
Being hit with an unexpected expense can offer a good opportunity to take a closer look at your budget. Categorize your expenses into needs and wants, and find ways to reduce your unnecessary expenses. Although it may be tough to cut back, look for items you can give up for the short term or something you can cut to make up part of the shortfall.
Figure out how much credit you have and the total amount that is available. If you still find that you’re coming up short, consider asking your lender to increase your credit limit.
Using a combination of these strategies, you may be able to get your budget back on track. If you still find yourself strapped for cash, there are other emergency funding options you can consider. If this is a recurring issue, consider speaking with a credit counselor for additional guidance. The key is to stay positive and keep searching until you find a solution that works for you.
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