What To Do When Your Financial Situation Changes For Better Or Worse

From hiccups to come up’s, navigating change in your finances starts with a little planning. Throughout your personal finance journey, sometimes circumstances can catch you off guard. From a pay raise to a job loss, and even a lottery win, preparing yourself as much as possible is key. If there has been a change in your income, follow these quick tips for navigating unexpected shifts in your finances. 

Hopefully while you were manifesting this raise, you also did some forecasting with your budget. If not, here is an easy first step: Invest in yourself. Use a portion of your new income to cop that certification you have been eyeing, pay membership dues for that super connected organization you want to join, or even buy tickets to that out-of-town conference you have been dying to attend. Simply put, use this money to make more money. After that, dump your new funds into your financial goals. Finish your emergency fund, pay off the high interest debt, and max out your retirement account.

Layoffs are constantly in the news these days. Losing a job is never a fun experience. Even a dream job with a family culture could catch you off guard with a termination. First step is to explore the possibility of severance pay. It cannot hurt to ask. Quickly google verbiage for requesting severance pay and shoot an email over to your supervisor & HR contact. Which brings us to the next key step, jot down your HR contact for post-termination follow up’s. Nerdwallet.com states, “Having a person to connect with at your former employer, like an HR pro, will be crucial if you need help rolling over your 401(k)-retirement plan, or if there are any issues with delivery of your severance pay.”. Lastly, file for unemployment benefits immediately. Approval for these benefits can take several weeks even months. Once approved, unemployment income can serve as a bit of a lifeline while you are hunting for your next gig. 

First, decide if you will receive a lump sum or not, and send a cut to “Uncle Sam.” Do not forget to use a small portion to celebrate. Buy yourself something nice (perhaps shiny), just make sure you keep it small. Do not waste this once in a lifetime opportunity to take your finances to the next level. 

Maybe a loved one has passed away and left you an unexpected inheritance. After taking some time to grieve, use this blessing to kick your financial goals into gear. As previously mentioned, build your emergency fund, pay off your high-interest debt, and pour into your retirement account.

Let us not forget about legal settlements. If you were involved in an accident and are expecting a rather large settlement check, take care of your medical bills and legal fees first. With the remaining dollars, make a little self-care purchase. You have already been through a stressful time and experience. Soothe your nerves with a spa trip (once you are cleared by your doctor).

Life is full of changes. It is fascinating how the power of a dollar can turn your entire world upside down, or right side up. If you are not currently experiencing any of the above circumstances, I challenge you to plan now for these potential events. However, you currently budget (spreadsheet, budgeting app, etc.) create one for each of these scenarios. If you want a bit more guidance, consult a licensed financial advisor to create a comprehensive plan for you.