How to Cope When Financial Crisis Hits Your Household
As parents, it is your responsibility to provide for the family’s basic necessities, pay the bills on time, put the kids to school and still need to be able to put some money aside for savings. With all these in mind, a major financial setback is the last thing you would want to happen.
Not only is it stressful and frustrating; money trouble also deals a strong blow that can derail your relationship as a couple and affect everyone in the family.
Unemployment, a serious medical emergency, and unexpected expenses such as a major car or home repair can all lead to a financial setback.
But the one true reason why this all leads to a crisis is that a lot of people are simply not financially prepared for these unforeseen situations.
A Federal Reserve Board survey finds that 4 out of 10 Americans couldn’t afford to pay for a $400 emergency expense, which means that those who don’t have cash on hand would have to sell some of their stuff, live off of their credit cards, or take out a debt just to get by. Their household debt to income ratio can become steep if a $400 contingent expense occurs.
If you find yourself thrown in one of these dire situations unprepared, chances are you and your family are going to struggle financially. However, it doesn’t need to be a harrowing episode for your family. Here are six helpful tips on how you can help yourself and your family deal with household debt and a financial crisis:
1. Turn to your faith and surrender all your troubles to God
Philippians 4:6 says, “Be anxious for nothing, but in everything by prayer and supplication with thanksgiving let your requests be made known to God.”
Being in a financial crisis is an extremely difficult time for anyone, especially if you have kids, and you as a couple will naturally begin to worry about everyday survival. However, you must not let your worries get the best of you.
Rather, take a moment to pray. Pray with your spouse, pray with your kids, and pray as a family. Ask for wisdom, guidance, and provision during these trying times. A marriage built with a strong faith in God as its foundation can surely withstand any storm that comes their way.
2. Communication is key
When faced with financial troubles and a stark household debt to income ratio, most couples tend to withdraw to themselves and start dealing with the problem as individuals. This lack of communication can compound the issue at hand and put a strain on the relationship.
Instead of working to solve the problem on your own, take the time to sit down with your spouse and talk about the issue openly and with complete honesty. This is the right opportunity for the both of you to let each other know how you feel about the situation, get to the bottom of the problem, and come up with an action plan that you both agree on.
3. Evaluate your priorities and finances
If you are not in the habit of tracking your family’s expenses, now is the time to start. This will give you a clear picture of your current financial position and why money is now an issue in your household. This is an important step to deal with household debt.
Start by listing down both of your income and expenses. If your household and personal expenditures far exceed your combined monthly income, then it’s time to re-assess all your priorities. Go over your list and strike out those items your family can do without such as cable and magazine subscriptions.
Cutting back on expenses can help you free up some much-needed cash that you can use to either augment your budget or save it in case of an emergency.
You may also find it handy to keep a list of all the conjugal assets that you have. These assets can be liquidated in order to keep your family afloat because the last thing that you’ll want is to bury yourself deep in debt just to make ends meet and put your family in an even more precarious situation than you are already in.
4. Get support
A lot of people feel embarrassed by talking to other people about their money problems and asking for help. But did you know that stress due to financial problems can also take a toll on your health? Studies show that financial stress is now being linked to anxiety and depression. About 65% of Americans are losing sleep over money problems. So, if your debt issues are becoming too much for you and your spouse to bear, then do not be afraid to ask for help.
Family and friends would definitely offer emotional support, if not financial support. You may also seek help from a legitimate debt counselor and consider signing up for a debt relief program to help you deal with your mounting debt.
Whatever you choose, having other people who are willing to offer their support will greatly ease the burden that you have.
5. Be honest with your kids
It is natural for parents to shield their kids from whatever problem that hits their household. After all, we must let kids be kids. Financial problems however, is something that you just can’t hide. Kids are highly-perceptive; they will definitely notice the changes in your household and sense your stress and frustration.
Talk to your kids at an age-appropriate level and let them know what is going on. Focus more on the values that they will be able to learn from this experience such as saving, budgeting, and the value of money, rather than the problem itself.
Most importantly, give your kids the assurance that as a parent, you are doing what you can to address the situation.
6. Go on with your daily life
Just because money is tight, doesn’t mean life has to stop. As much as possible keep your routine at home the same. Take the opportunity to explore low cost but fun activities such as afternoon playtime at the park with kids and visiting yard sales.
Instead of having dinner at a fancy restaurant with your spouse, why not have a candlelight dinner at home or go to free movie nights at your community.
Major changes that are unavoidable such as moving to a new home can be overwhelming, so if you see this happening in the near future, it is best to break the news, but do it gently. Focus more on the positive aspects such as having fresh start; what matters is that the family is together through thick or thin. Lastly, let each other feel loved and valued. You may lose all the material things money can buy but the love you have for each other as a family will last a lifetime.
Let this experience teach you and your spouse to be more intentional in managing your money so when something unexpected happens again that will have an impact on your finances, you’ll be more prepared to mitigate its effect and even prevent a crisis from happening.
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