Emergencies are all part of the adult experience. No one enjoys them, and they make a week or month so much more difficult. Financial disruptions can be planned (such as moving or a new baby) or unplanned (such as major car repairs or unemployment). All of these can end up being all -consuming when it comes to your time and attention, making it that much harder to focus on anything, especially your regular budget.
Establishing Different Savings
One of the best ways to recover from a serious financial disruption is to have either a savings account towards a planned disruption or an emergency savings account set aside. If the disruption is expected, then you need a different savings account for it. Moves very rarely end up happening at the spur of the moment. Even those people who have leases have an idea when a move is inevitable. Planned disruptions should not dip into your emergency savings.
Emergency savings are for unexpected disruptions, things that you have no way to plan for. You should have an account that you never touch set aside just for such emergencies. This will keep you from dipping into your retirement or other accounts when you know you will need the money later.
Resuming Regular Savings
While you will want to get back to putting money aside as quickly as possible, make sure you are out of danger first. Many accounts will charge higher fines if you take money from them early. The best way to ensure you don’t lose extra money to fees and fines is to make sure you are stable again first.
Once you are financially stable, see about socking away a bit more money than you usually would to make up for the time when you weren’t able to save. Financial interruptions reduce how much money you have saved for retirement, future events, and other emergencies. Clearly you will need to start putting money away so that the next disruption is minimized.
Determining the Need for Additional Savings
Once your life is back to normal and you have had time to consider everything that went wrong (whether or not the disruption was planned). You will need some time to get a more subjective perspective on the event, so don’t do this immediately after, give it a month or two. Then start planning for ways to save for a similar event in the future. If you were laid off, figure out how long it took you to get a job and try to put enough money aside to cover a similar event in the future. If you moved and ended up going far over your budget, figure out if the problem was with having under budgeted for the move or because you were not efficient in your planning.