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4 essential steps to take during a financial emergency

CATHERINE ALFORD • April 28, 2020 • 6 min read

What we'll cover

  • Four steps to take in a financial emergency

  • How to focus on the bare necessities

  • Ways to earn more money

As a financial educator, I help young families develop better money habits. I teach them how to budget, how to buy a house, how to pay down student loans, and even how to teach their kids about money.

I often talk about preparing for financial emergencies, because it’s helpful to have a cushion when your car breaks down or your basement floods or your crazy three-year-old breaks his arm leaping from the couch.

When teaching others, I often bring up my own experiences, too, especially when it comes to emergencies. There was the time my husband got into a car accident and broke his wrist. And let’s not forget when my hot water heater started making this super loud and foreboding whistling sound as I was trying to put my kids to sleep. (That one cost me $1,500.)

But, I have to say, in all my time encouraging others to save for a rainy day, never once did I envision the entire world would experience an emergency collectively in the form of a pandemic. All of us are facing so much uncertainty, and I don’t know about you, but on some days, that feels heavy. Everyone I speak to is hurting in some way. I, personally, have a lot of days when I’m scared and worried. And, although those are uncomfortable feelings, in some ways it’s nice to know I’m not the only one.

You are not alone.

If you wish you had more money saved right now, you’re not alone. If you lost your job, you’re unfortunately not alone there either. If you’re scared of getting sick or know someone who is, that is now the norm. If you’ve always been able to make your student loan payment but now you can’t, there are so many others who are in those same shoes.

Millions of people all over the world are experiencing financial hardships they did not expect. So many businesses were thriving and now they are not. So many restaurants were busy and vibrant, and now they are silent. I don’t know about you, but it’s the uncertainly that pains me the most, not knowing when – or if – the world will go back to how it was.

One of the ways I combat those feelings, if they’re not serving me, is to focus on the things I can control. So, I want to share some financial steps you can take to help you improve your finances – starting today.

Depending on your own personal financial situation, you may not be able to complete some of the steps below, and that’s ok. They’re just suggestions and a guideline to help you along the way. Even being able to complete one of them will help to improve your financial mindset right now. Then, you can save the others for when you’re in a better financial position.

Step 1: Focus on the necessities.

As children, we learn about needs and wants, but now, knowing the difference between the two is more important than ever. If you lost your job and your cash is dwindling, there are really only two things you need to worry about: food and shelter.

It’s also important to create a bare bones budget if you need to. This means taking out your bank statements and looking at what you spent over the past few months. As you go through it, try to find things you can cut out.

For example, think about pausing that awesome clothing rental subscription. You also might not need to make your monthly gym membership payment, if it’s closed. Make sure your kid didn’t push a few buttons and make an Amazon order without you realizing it (I speak from experience). Every time you see something that’s not necessary, let it go.

This doesn’t mean you can’t have fun in the future. Some day, when all of this has passed, you’ll get to go to the movies and out to eat with your friends again. This is a temporary problem, and cutting excess expenses is a good way to start conquering it. You don’t have to be exceptionally frugal for years to come, but exercising that muscle right now while the world is quiet is not a bad time to try it out.

Step 2: Call your lenders and service providers.

Even though food and shelter are the most important needs, you still might have trouble paying your bills, whether it’s your rent or mortgage payment or car note. If that’s the case, it’s time to be brave and make some calls.

I know, I know. I don’t like making phone calls (it’s the millennial in me, what can I say?). But, this is a time to speak one-on-one with your lenders. It’s helpful to speak to real people on the phone if you can’t pay your bills, because real people are the ones who will be able to help you at this time.

The silver lining in all of this is that, again, you are not alone in your financial stress. Millions of people across the world are having trouble meeting their financial obligations. As such, many different lenders and companies are offering relief to those affected by the pandemic.

Start with your largest monthly bills, which might be your student loans, your car note, and your mortgage payment, for example. Call your lenders and ask if they have any type of relief program. Be sure to ask as many questions as possible about what that relief entails, because what may be the case for one company might not be the same for another.

If you need to pause your payments to survive, that’s ok. Survival is more important right now. Just make sure you understand if that’s allowed and what happens in terms of fees and interest charges if you choose to defer your payments. Also, make sure you have a plan for when and how you’ll make up payments when you get back on your feet in the future. Keep detailed notes of your phone conversations with lenders, and be as kind as you can.

Everyone, from bank employees to insurance company agents to cell phone providers, are all in uncharted territory. It might take time for employees to get up to date on relief policies, so be patient and hopefully, they’ll be helpful and patient with you, too.

Step 3: Look for ways to earn more money.

Try to spend some time each day brainstorming ways to earn more money. If you’re Internet savvy, you could consider becoming a virtual assistant, teaching an online class in something you know well, writing articles for blogs, or transcribing podcast episodes.

If you prefer not to work online, think of other ways you can share your talents. For example, one of my neighbors sells extraordinary pies and leaves them on her porch for pick up. Another paints pictures of people’s houses for real estate agents to give their clients as gifts, (because people are still buying houses right now!)

So, think about what you enjoy doing and how you might be able to profit from your hobbies and talents to earn extra money right now.

Step 4: Start an emergency savings account (when you’re ready).

Lately, I’ve been really focused on adding money to my Ally Bank Online Savings Account whenever I can. I’ve cut out a lot of expenses recently that I thought I couldn’t live without and that’s enabled me to divert those funds to savings. I still wish I had more money saved since no one is really sure how long it will take the economy to recover.

Keeping that in mind, I want to encourage you to start an emergency savings account whenever you’re ready. I know for many this won’t seem like a possibility for quite some time, but remember, even $5 or $10 set aside each month can make a big difference over time.

Ultimately, I know things might feel hopeless right now, especially if you’re out of work. But, if you start taking some of the steps above, it can help you to feel more in control of your finances. That, in turn, will enable you to survive – and even thrive – through this stretch of uncertainty.

Catherine Alford is a nationally recognized financial educator who partners with top brands to encourage, educate, and inspire people to take on a more active financial role in their families. She is also the founder of, an award-winning personal finance blog that she created in 2010. Follow her on Instagram @CatherineCAlford.

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