At some point in your life, you may experience a financial curveball thrown your way. Maybe it’s a job loss, unexpected medical bills, or even a natural disaster that caused serious damage to your home. We’ve all been there — and it’s a scary place to be. While it may feel like you’ll never bounce back from a financial downward spiral, you can. As daunting as it seems, the ability to rebuild your finances is an empowering part of the journey — don’t let the anxiety and stress of what lies ahead take over. Instead, simply make a plan and get started.
The act of preparation
Studies have shown most Americans don’t have $500 at their disposal in case of emergency. That’s why being prepared for uncertain times is important — and why having a vision of what you want your financial future to look like is a must. Taking time to evaluate how your money is doing and where it’s going is always a good idea. The more proactive you can be now, the better prepared you’ll be should you encounter hardship later.
But if you find yourself in the middle of a hard financial time right now, here are 8 things you can do to recover your finances:
1. Evaluate the state of your spending
First and foremost, look at where your money is going. Can you identify trends and spending habits? Are there things you can cut back on or remove from your budget entirely? Instead of sifting through various bills and receipts, it might be more beneficial to use a money management tool to help you track your spending and identify ways to scale back. Once you identify where your money is going, you can minimize discretionary expenses (like streaming video services or gym memberships) and make a plan. Will it be tough to give up some of these comforts? Probably. But remember, it’s only temporary until you get back on track.
- Tip: Consider working with a financial adviser. The CFS1 Financial Advisors at General Electric Credit Union will use industry-leading software to provide you with an extensive, complimentary financial plan based on your wants, wishes, and needs. This software runs thousands of trials and helps you feel confident you'll have enough money to fund your future. A financial plan is ever-changing, so you can always make adjustments to ensure your personal and financial goals are aligned.
2. Shop smart and reduce bills where possible
Living within your means isn’t a novel concept — but when your means are less than you’re used to, living within them can take some adjustment. To put it bluntly: You’ve got to make big changes — and that takes being honest about what you can and can’t do. It means only purchasing items you can afford and ensuring you have enough income to pay for your everyday expenses. It means only relying on the money you have available in your accounts, opposed to using credit or loans as much as possible. If rent, for example, is your biggest monthly payment, rebuilding your budget may need to include a way to reduce it — try renegotiating your lease with your landlord or finding a roommate to help cover the cost. Once you’ve reduced your big bills, work on being a smart shopper. Use coupons, price shop, and buy generic products. Don’t be afraid to get cheap — real cheap.
3. Build your emergency fund
Because you never know when financial hardships may arise, having an emergency fund set aside means less financial burden or stress. You can turn to this fund when all else fails and it will be there ready and waiting. How much should you save? It depends on your situation — but it’s recommended to have enough for six months’ living expenses at minimum. Cut back on items or services that aren’t necessities and instead transfer more into your savings each month. Set up automatic transfers every paycheck and it will be out of sight, out of mind. Before you know it, you’ll have hit your goal.
4. Get creative and find ways to make extra income
Whether it’s a part-time job or doing some work on the side, having extra cash on hand will be helpful to cover your monthly expenses and build savings. Host a garage sale, teach piano lessons, or become a tutor… the possibilities are endless.
5. Consider refinancing your home
If you’re trying to get your finances back on track, it may be a great time to look at refinancing options while mortgage rates are low. If you’re currently in an adjustable-rate mortgage, a fixed-rate option may be better suited for the current economic environment. Check out 3 Reasons to Refinance Your Home to determine if you could benefit.
- Tip: Many turn to GECU when they want to refinance their home to: lower their interest rate, change their term, or convert to a different type of mortgage (such as a fixed rate). Contact our team to find the best refinancing option for you.
Protect and monitor your credit score. Pay your bills, make payments to your loans in a timely manner, and avoid taking on more debt if you can. Your payment history and credit utilization affect your credit score the most. By having a good credit score, you’ll have access to credit at a reasonable rate because you took measures to safeguard it. Additionally, you can request a free weekly credit report from each of the three major credit bureaus each year. Having access to this information not only will help you with visibility to your finances, but it will act as a roadmap, so you know where you are and what you need to do next.
- Tip: The more you understand your FICO® Score and credit report, the more confident you'll feel about making financial decisions. GECU offers qualifying members access to their scores for free, within Online Banking and the mobile app!
Learn more about what's included on a credit report and how to read one with GECU's free, downloadable eBook The Ultimate Beginner's Guide to Credit Scores.
6. Continue contributing to your 401(k) or IRA
It may go against natural instinct when you’re in the midst of a financial hurricane, but if you’re able to, continue contributing to your retirement plans as usual to avoid any long-term impact to your strategy. If you do have to push pause, keep it temporary.
- Tip: An Individual Retirement Account (IRA) allows you to save for retirement with tax-free growth or on a tax-deferred basis. While there are a variety of types of IRAs, Traditional and Roth IRA are the most popular, a GECU Relationship Consultant can guide you in a direction that will work for your goals.
7. Find an accountability partner
Friends and family members can be a great source of support during a challenging financial time. Once you’ve made your plan and set goals to hit, finding someone to hold you accountable can make a huge difference and keep you on course.
Why choose General Electric Credit Union
When you’re in the thick of it, rebuilding your finances might seem overwhelming — but taking it one step at a time makes it both digestible and attainable. Set goals and take an honest look at your finances — doing so will set you on a recovery path. During times of financial distress, the easiest thing to do is watch your spending, focus on what you can control, and build your emergency fund.
At GECU, being a member means more than just better banking — it means being part of a community with access to solid financial solutions that put YOU first. Our CFS financial advisors can help. Spend time with our professionals to analyze your situation, review your credit report and discuss your options.
It’s easy to join, as membership is open to anyone in Greater Cincinnati. You’ll find GECU consistently offers area-leading deposit and loan rates, has lower fees than banks, provides robust digital tools and access to almost 100,000 free ATMS across the country.2