Sometimes you lose and sometimes you win. While this might sound like an empty statement, everybody has had bad and good days. As there is no rule that defines when life brings you positive or negative surprises, you would expect people to prepare as best they can to face both situations. However, there’s no denying that most households tend to ignore their emergency loss planning, probably hoping that if they refuse to envisage the possibility of a loss, then it will not happen.

From a philosopher’s point of view, it’s a sign that you live in an optimistic society. From the perspective of a family budgeting expert, it’s a costly risk that can leave unprepared for a difficult situation. Ultimately, as there is no way of knowing what life is made of, it’s always a good idea to have a financial plan B, for when things turn unexpectedly ugly. Here’s what you can survive financially in a loss situation.

You lost your job or your income

A sudden drop in income, whether it’s the result of a cut in benefits or a professional backlash, can put your household routine at risk. While the first reaction might be to panic, you need to keep a cool head and start planning for a frugal lifestyle. Start by assessing what needs to be paid for the period and reviewing what is truly necessary – do you need that subscription to your knitting magazine? – to reduce expenses. Stick to a meal and commute plan can also help to make a small budget go a little bit further. And finally, ensure that you can find the support you need, emotionally, professionally and legally, from the most appropriate and free institution as you devise a strategy to get back onto your head.

You lost a relative

Everyone dreads that phone call in the middle of the night when a sobbing voice informs you that your great-aunt Amy has just passed away. From an emotional perspective, the time is for grief. But financially, you need to remain vigilant. Indeed, if your relative has left a lot of debts, you’ll need to plan for cheap funerals that stay decent and dignified to save money. You might need to sell their assets to repay their debts. In some cases, if you’re lucky, getting rid of physical assets and stocks can be enough. But it’s not always the case, and you might have to repay the debts of your relative from your pocket.

You lost your home

The snowstorm that has taken the UK by surprise has left several houses with no electricity. Every year dramatic weather conditions put homes at risk. In fact, at a global level, natural disasters cost the insurance sector 996 billion. In other words, with the right home insurance losing your home doesn’t put you out-of-pocket. However, you need to ensure that your insurer will accept the claim. For isolated damages resulting from a lack of maintenance, insurers will refuse to pay. Similarly, it can be difficult to claim for flood damages if you haven’t paid the flooding premium.

In conclusion, you may not be able to plan now for the worst-case scenario. But you can certainly take all the precautions to lessen its impact on your lifestyle.

Disclosure: This is a collaborative post.

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