64 Chapter 2 Making Smart Decisions
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In hard times or during a recession, an emergency fund should equal 8 to 10
months’ income. Other preventive measures include:
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Preventive measures often help you avoid financial problems altogether.
They also can minimize the impact of unavoidable problems, such as the loss
of a job in a recession.
There may be times when financial disaster strikes because of circumstances
beyond your control. A family financial crisis is a major problem that
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divorce, death, disability, serious illness, and natural disasters. When such
events occur, you may need to make some serious changes in your financial
planning and behavior. If debt problems reach the crisis stage, you need
prompt, drastic action to correct the situation.
Start by discussing the problem with adult members of the household,
including older children. Make sure that everyone understands the potential
impact on their standard of living and what they can do to help. For
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or a community college near enough to allow living at home while going
to school. Knowing they have a stake in resolving the crisis will encourage
cooperation of all family members and reduce conflict.
Make a list of financial and nonfinancial resources available to you.
In analyzing your situation, consider the following steps you can take to
minimize negative financial or other consequences.
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government programs, and community or charitable organizations.
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valuable possessions.
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Some situations may call for the help of professionals. Consider consulting
health-care providers, family counselors, financial advisors, and lawyers to
determine the full scope of the crisis.