During uncertain financial times, it pays to be prepared
Life has a way of throwing you financial curveballs when you least expect it.
For education members, those curveballs can be especially hard-hitting.
Wage freezes, reduced government funding, pay grid restructuring, job loss, or interruption—any of these have the potential to significantly affect your cash flow.
Then there are the regular, ‘everyday’ financial emergencies.
Things such as an unforeseen car or home repairs can be costly, particularly if you’re lower on the pay grid or are living on a single income. While you might not have a crystal ball to predict the future, having a financial action plan in place will at least provide you with a proactive (versus reactive) way for handling financial curveballs, when they come your way.
Here are 2 ways you can be financially prepared for the unexpected over the long term:
#1: Start an emergency fund.
Having an emergency fund in place puts you in a better position to stay afloat when the financial waters get rough—without having to rely (solely) on credit cards or other forms of debt. As a rule of thumb, you should aim to have 3 to 6 months of expenses saved up, just in case.
Tips for setting up an emergency fund:
- Choose the right kind of account(keeping in mind it should be easy to access when you need it)
- The account should be separate from all other accounts (i.e., only for emergencies)
- It should have no (or low) fees and you should be able to make withdrawals without penalty
- Automate your emergency fund savings, such as with pre-authorized contributions
Here’s how to put your emergency fund-building plan into motion
#2: Pay down debt.
Regardless of whether you’re working full-time or are occasional/support staff, debt repayment can take up a big portion of your monthly cash flow. If that cash flow was to suddenly lessen (or stop altogether), it could be even more challenging to continue making those payments. That’s why the time to have a debt repayment strategy in place is when you have regular income coming in.
Here are 2 ways you can be financially prepared to handle the unexpected at a moment’s notice:
#1: Know your basic budget.
The typical budget consists of a healthy balance of ‘needs’ (rent, mortgage, food, etc.) and ‘wants’ (eating out, travel, hobbies, etc.). Should things suddenly get tight financially, your typical budget won’t apply. Knowing your basic budget for this scenario (e.g., exactly how much money is required to cover the essentials) will enable you to immediately identify where to cut back (or cut out).
Here’s how to build a budget that works
#2: Consolidate high-interest debt.
It’s important to protect your credit rating by continuing to pay down debt/bills on time. Consolidating high-interest debt can be a possible solution to help free up some much-needed monthly cash flow.
If your debt is under control, but haven’t had the time to build up your emergency fund, consider getting pre-approved for a secured home equity line of credit which can serve as your ‘financial emergency backup plan’, should you need it.
Whether it’s a short-term solution or a long-term plan, tap into educator-specific resources to support you—every step of the way.
Working exclusively with education members since 1975, we’ve supported your community through many changes and challenges over the years. That kind of history means we have a genuine understanding of the unique financial aspects that make up your world, such as pay grids, pension contributions, and collective bargaining. So if you find yourself suddenly faced with the unexpected, we’re in a great position to help you financially prepare better than anyone else.
It really does pay to be prepared: click here to have one of our financial specialists contact you
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