YOUR CASH IN a crisis

NOT MANY OF US PLANNED FOR A GLOBAL PANDEMIC. MONEY EXPERT LACEY FILIPICH EXPLAINS HOW TO COPE IF YOU’VE LOST INCOME

USE YOUR BUFFER FUND WISELY

Your buffer fund (or emergency fund) is for dealing with financial knocks, and job loss certainly fits that description. Using buffer money, if you have it, to cover your living costs in the shortterm is a better option than going into debt. But don’t drain it wastefully. What costs can you get rid of in the shortterm to reduce the money going out?

GET HELP

There may be financial and training support available to help you get back into work. Don’t let pride get in your way. Apply for welfare and job-readiness programs, and take free appointments with not-for-profits to help you work out your options.

SELL UP

The alternatives are much less attractive: selling assets and/or going into debt. I feel ill thinking about this, but sometimes it’s necessary to sell some assets to cover your costs. If you have unencumbered assets that are easy to sell – such as bonds or shares – this can be quick. If you have assets like property, it can take months or years to liberate that cash for living on. Going into debt should be an absolute last resort.

FAMILY VALUES

Try letting your family know you’re in strife – they may give you some comfort or even an offer of financial support. If you’ve been responsible financially, you might be one of the lucky few whose family will loan some money to cover your loss in the short-term – so long as you pay them back!

BUFFERING…

Once you’re back on your financial feet, it’s time to refill (or create) that buffer fund. You might be willing to sacrifice some lifestyle to speed up the saving rate – that’s up to you, but it’s another way to fill the buffer fund quicker. * This is an edited extract from Lacey Filipich’s Money School

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