Life doesn't always go according to plan. A job loss, serious illness, injury, divorce or death in the family can have significant financial consequences. You may not be able to predict when an unexpected event will happen, but you can take steps to make your finances more resilient.
Build an emergency fund
An emergency fund can help you manage unexpected expenses or a temporary loss of income without relying entirely on credit. Start with an amount that fits your budget and build it gradually. Keep emergency savings somewhere accessible and appropriate for short-term needs.
Know your monthly financial commitments
Make a list of your essential expenses, including:
- Housing
- Utilities
- Food
- Transportation
- Insurance
- Debt payments
- Childcare
- Other essential costs
Knowing what you need to cover each month makes it easier to determine how long your savings could last if your income changes.
Keep important financial information organized
Make sure you know where to find:
- Bank and investment account information
- Insurance policies
- Mortgage and loan information
- Pension information
- Tax documents
- Your will
- Powers of attorney
- Important contact information
If someone needs to help manage your affairs, having this information organized can make an already difficult situation easier to navigate.
Review your insurance coverage
Insurance can help protect your finances against certain risks.
Depending on your circumstances, you may want to review:
- Life insurance
- Disability insurance
- Critical illness coverage
- Health coverage
- Home and property insurance
- Other applicable insurance
Your needs can change as your income, family, debts and assets change.
If you lose your job
A sudden loss of income can make it difficult to keep up with regular expenses. Start by understanding how much money you have available and create a temporary budget focused on essential expenses. You may also be eligible for government benefits or other support depending on your circumstances.
If you separate or divorce
Separation can have significant financial consequences, particularly when you share a home, investments, debts or other assets.
You may need to review:
- Joint bank accounts
- Credit accounts
- Mortgages
- Investments
- Insurance
- Beneficiary designations
- Housing arrangements
- Child-related expenses
- Your will and powers of attorney
Because family-law rules can be complex and vary by circumstance, anyone going through a separation or divorce should seek appropriate legal and financial advice.
If someone close to you dies
The death of a loved one is first and foremost an emotional experience. Financial and administrative responsibilities may also need to be addressed.
Depending on the circumstances, these can include:
- Contacting the executor
- Locating the will
- Reviewing life insurance
- Reviewing beneficiary designations
- Identifying bank and investment accounts
- Identifying debts and assets
- Contacting pension providers
- Managing ongoing household expenses
If you're responsible for administering an estate, consider getting legal and tax advice
If illness or injury affects your income
A serious illness or injury can affect both your ability to work and your household's income. Review what sources of support may be available to you, including employer benefits, government programs and applicable insurance coverage.
If you have disability insurance, understand:
- When benefits begin
- How long benefits may continue
- What qualifies as a disability
- How much income may be replaced
- Any exclusions or limitations
Policy terms vary, so review your specific coverage rather than relying on general assumptions.
If you're experiencing financial hardship
If an unexpected event has already affected your finances, don't wait until the situation becomes overwhelming.
Start by:
- Listing your essential expenses.
- Reviewing your available savings.
- Prioritizing essential bills.
- Contacting creditors if you're having difficulty making payments.
- Reviewing available government or community assistance.
- Speaking with a financial professional about your options.
The earlier you understand the situation, the more options you may have.
Prepare before you need to
Financial resilience isn't about predicting every possible problem. It's about creating enough flexibility that you can respond when circumstances change.
Start with the basics:
- Build emergency savings
- Protect your income where appropriate
- Keep important documents organized
- Review your insurance
- Maintain an up-to-date estate plan
- Know your monthly essential expenses
- Review your financial plan when major life events occur
You can't always prevent unexpected events, but you can prepare your finances to handle them.
This article is for general educational purposes only and does not constitute financial, legal, tax or insurance advice. Government programs, eligibility requirements, insurance policies and applicable laws can change. Consult qualified professionals for advice specific to your circumstances.
