Life is all about change. Some changes you plan for and welcome with open arms. Others find you, whether you’re ready or not—with an emphasis on the not.
Whether it’s the nuisance of a flooded basement or the devastation of a death in the family, it’s hard to be 100% prepared—both emotionally and financially—for some of life’s unexpected events.
The one bit of good news is that more of us, thanks in part to lessons learned from the economy, are saving better. According to a recent Chase Blueprint®/Aite Group survey, about 40% of people are saving more now than they did during the recession by finding ways to cut spending.
The bad news, however, is that there’s still room for improvement: More than half of Americans don’t have enough emergency savings to cover three months’ of expenses, according to the FINRA National Financial Capability Study.
This is all the more reason why it’s critical to know what to do—and what not to do—right after a disaster. Mistakes you make when you’re in transition and vulnerable can have ramifications for years, and smart moves at a time of crisis go a long way toward mitigating the mess and helping you move forward.
So before an unfortunate event strikes, school yourself on these invaluable first steps to take if you’re ever confronted with one of these five financial emergencies.
Life Emergency #1: Divorce
When a marriage is being dissolved, you may be mending a broken heart, but you’ll also have to deal with broken finances—especially if money is a big part of why you’re getting divorced in the first place.
As angry as you may be, now is actually a key time to collaborate, says Julie Murphy Casserly, a Certified Financial Planner™ and president of JMC Wealth Management. The reason is simple: digging in your heels and fighting relentlessly about everything could cost you a lot of money and undue stress.
So you may have to decide which assets are actually worth fighting for. The big house, for example, might be too much of a financial burden when you’re on your own. So in addition to hiring your own lawyer, says Murphy Casserly, consider working with a mediator who can help keep things on track.