How to Maintain Financial Stability During Tough Times

NEW YORK, February 2, 2023 (Newswire.com) - iQuanti: There are a lot of things that can lead to financial hardship, such as job loss, divorce, a death in the family, etc. As unfortunate as any of these events may be, it's important to keep your head above water and do what's necessary to ride out the storm. Here are five ways you can avoid financial hardship during any tough time.

1) Don't Blame Each Other

During times of trouble, spouses can sometimes let their tempers flare. They might point the finger and accuse one another of not doing their part. However, doing this doesn't help anybody and only worsens the situation.

The only thing that will get a household through tough times is for everyone to work together. For instance, if one spouse loses their job, then the rest of the family will have to tighten their belts while the family survives for a while on one income. This will be uncomfortable for a few weeks or even months but with a bit of positive encouragement, things will get back to where they were before.

2) Prioritize Your Essential Bills

When financial resources are scarce, separating your wants from your needs will be necessary. This means making sure that your essential bills are paid first. Essential bills would be things like:

• The mortgage
• Food
• Taxes
• Minimum debt payments
• Etc.

Consequently, this is also a good time to start embracing a minimalist lifestyle. Costly things that you used to do for entertainment will have to go on hold and be replaced with less expensive activities, such as reading a good book, going for walks around the neighborhood or simply enjoying the company of your good friends.

3) Have an Emergency Fund Prepared

Before a financial disaster ever happens, one of the best ways to be on the ready is to have an emergency fund set up ahead of time. An emergency fund is a standalone account with three to six months' worth of living expenses. This account should be in cash and available to withdraw at any time you need it.

The best way to get an emergency fund is to build it up during the good times. Instead of spending extra money, periodically reallocate a portion into the emergency fund. The more disciplined you are about doing this, the better prepared you'll be the next time a financial emergency strikes.

4) Purchase Enough Insurance

No one likes to think about their mortality. However, one of the things that often creates financial hardship in families is the sudden loss of a working parent. Overnight, the surviving parent is not only without a partner but they must also figure out how to pay for the mortgage and raise the children on whatever financial resources they have.

Families can avoid this by applying for a term life policy. Term life insurance is one of the most straightforward and inexpensive policies you can get. For a relatively low premium, you and your spouse can enjoy decades of coverage, knowing that each of you is covered in case something tragic happens.

5) Don't Be Tempted to Raid Your Retirement

When you're in desperate need of money, your retirement fund can look like the perfect place to pluck from. However, please don't do this. 

Borrowing against your retirement savings inhibits its ability to produce future earnings. This can set your nest egg back from achieving its full potential. Additionally, if the funds are withdrawn (instead of being taken out as a loan), you'll have to pay the IRS a hefty 10% penalty in addition to any applicable taxes.

The Bottom Line

While It's not easy to maintain your composure during tough financial times, do your best to work together with your partner as a team by exploring ways that the two of you can survive on less. Prepare ahead of time by having an emergency fund and term life insurance put into place, and don't be tempted to tap your retirement savings. By doing all of this, you'll be able to ride things out together and get back on your feet in no time.