There are many possibilities for a financial crisis to occur in each of our lives.
The best way to handle any type of financial crisis is to figure out how to handle it before it occurs. We recommend creating a “Crisis Budget”. What’s a crisis budget? It’s your budget, which has been revised to take into account a potential major upheaval in your family finances.
Maybe you are a government employee and have been directly affected by the Fiscal Cliff and the resulting Sequester. Or maybe you own your own business and are concerned about falling sales, or maybe you just have a vague feeling that your job is not secure.
When a crisis occurs we are busy reacting to it. We are also very emotional about whatever happened. By creating a crisis budget before a crisis occurs you have time to analyze your current spending and make objective decisions about how to handle a loss of income and the resulting impact to your family finances.
As you create your “Crisis Budget” think about what circumstances may trigger a crisis and a resulting financial impact. If both you and your spouse work, a crisis may be that one of you loses your job, or maybe you are retired and your savings is not generating the income you had planned. If you are part of a one-income family, possibly it’s a total loss of your normal income.
If any of these things happen you will be scrambling for a new job, trying to deal with the crisis while also trying to earn some part time income. It’s not a good time to be analyzing your spending and making major decisions about how to change your buying habits.
Think about one or two of the most likely financial disasters that could occur in your life then create one or two budgets that will closely match the loss of income. If/ when the crisis arises, you will know exactly what to do. Many times you will have some level of knowledge in advance of a job loss, layoff or reduction in pay. If you have prepared a “Crisis Budget” in advance of a crisis, you will be able to implement the reduced budget as soon as you think that there might be an income issue. Don’t wait until the crisis happens; implement your “crisis budget” at the first sign of trouble! Implementing your crisis budget immediately will give you peace of mind, help you feel some level of control and deal with your potential loss of income all at the same time
During a time of crisis it is easy to become discouraged, but it is just at these times that we need to turn to God for hope. In Hebrews 13:5-6 we hear “The Lord is my helper, I will not be afraid.” In a time of crisis, turn to the Lord for your strength. Adversity often gives us the opportunity to grow into the people God wants us to be; it gives us the opportunity to learn things we just could not learn any other way.
If you aren’t sure how to create a crisis budget, and would like to know more about what God says in the Bible about handling money and possessions, take the Compass Catholic nine-week Bible study, Navigating Your Finances God’s Way.
Watch for our next blog on the American culture’s worship of money.