What do you do when something rocks your life – and not in a good way?
Have you ever been caught off guard by a major life event that will impact your financial life significantly? Have you ever ran into serious situations where you have unexpected expenses and aren’t sure how to get back on your financial feet?
Perhaps you have dealt with or are dealing with any of the following:
- The death of someone you love dearly.
- Divorce.
- Needing to file bankruptcy.
- Pandemic that changes everything from birth to death.
- Serious car wreck.
- House fire.
- Losing your job.
- Discovering a family member is seriously ill.
These are all events that make it feel like the financial ground below us is no longer steady. I call this a lifequake. In addition, there can be aftershocks that take us by surprise in the future, too, but still related to the first event.
11 Tips for Overcoming Unexpected Expenses
1. Catch your breath, but not for too long.
Take some time to rest and to process what has significantly changed. Lifequakes remind us what it feels like to be vulnerable. Remember, tears bring healing. Once your mind isn’t racing through all of the things, you can think more clearly about the situation, the unexpected expenses, and move forward.
2. Delay any major financial decisions that you can.
I just reread Lynn Cain’s book, Being a Widow. She writes, “During my crazy periods, I made terrible financial mistakes. That’s why I keep repeating my advice to new widows. Sit down. Be quiet. Don’t move. You have to understand that your mind is not working properly, even though you think it is. Protect yourself from yourself.”
3. Watch the temptation to spend money on things in an effort to fill the void you may be feeling.
If you are from the midwest, you may recall a large tornado that devastated Joplin, Missouri. This was a lifequake of course for the families affected. Some families stayed put, but another was tempted by the family. One such family took the insurance settlement money from their home that blew away and used it to take the extended family to Disneyland. They explained that it would likely be the only time they had enough money in hand to take the family there.
I can appreciate the need to fill a void, but which was most important? Grandma and grandpa getting a roof re-established over their heads or taking their adult children and grandchildren to Disneyland for a few days?
4. Get quality information you need.
You’ll find that lots of people think they know what you should do. Be very selective in who you listen to. I don’t mean to be unkind but some of the people quickest to give advice are those that are most inept at managing their own lives. I also cringe when people say they have “researched” a topic on the internet. Seek out quality professionals that can help you and avoid would-be advisors that seek you out. Wait on making investment decisions or major purchases until you can gather your thoughts and reassess your goals.
5. Focus on Your Own Household First.
I worked for many years with a good colleague Parman Green. He always pointed out not to make financial decisions that are “good for your adult kids” unless they are good for you, too. If you have adult children – read this point again. Commit it to memory.
It’s important to be generous, but when a lifequake happens, and unexpected expenses are coming your way, it’s an important time to tighten up the hatch so to speak.
6. Research How the Resources You Already Have can Support You.
If you are experiencing a lifequake related to something you have insured (your property, your health), and you are not familiar with the specifics of your insurance, begin gathering that information. Make sure you have medical insurance and are getting the health care you need.
7. Focus on Your Needs.
When things are going well, it’s easy for the line between needs and wants to be a bit blurred. When a lifequake happens, separate needs from wants. Make sure you have necessities. Wait on wants and any new luxuries, so that you can focus on taking care of yourself and any unexpected expenses that have arrived.
8. Revisit Your Goals.
Your life has changed, your goals may be changing, too. Do you need to revise any priorities? Do you need to make changes in how you use your time? Don’t pretend things haven’t changed. They have.
9. Inventory your finances.
Just as your goals and priorities may have changed, your financial outlook may have changed as well. Look for opportunities to redirect funds to fit your changed needs. Look for emergency funds that can be used if you have to have them.
10. Review Your Credit Report.
When things get flipped upside down, it’s easy to miss things. Take time to do a financial check up. Get a copy of your credit report to make sure it is accurate and you haven’t missed any payments during your lifequake. Only use annualcreditreport.com
11. Learn Even More About Financial Management and Increasing Well-being.
When you are at loose ends, you are also powerfully positioned to learn and grow once the initial shock wears off and life begins moving forward. Take time to invest in increasing your knowledge so you are better positioned for future lifequakes and unexpected expenses. It’s likely a matter of when, not if, one happens again.
About MPower Co
If this article, written by Dr. Thia Crawford, MPower Co’s Director of Education, on lifequakes and unexpected expenses has you thinking about your financial preparedness, let us help you put those thoughts to action! Maybe you are wishing for an emergency fund or one that is better funded? You may be an expert in your professional field, but have never taken the time to learn about personal finance. Maybe you are thinking you need a better understanding of your current insurance. MPower Co s a user-friendly financial education business that helps people just like you to strengthen financial know-how through online courses and coaching. We don’t sell any financial products. What we do provide is life-changing knowledge you can count on. Our work is grounded in academic research and best practices.
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