6 ways to deal with a financial emergency

Life is unpredictable. And if the unexpected affects your finances, even relatively minor expenses can cause problems for many. The arrival of COVID-19 hasn't made things easier.

So if you’re dealing with financial hardship, you’re not alone. But there are still some steps you can take to help you get back on your feet. Here are six ways to deal with a financial emergency.

Financial emergencies can be stressful. And financial anxiety can affect people in different ways. But if you’re able to pause and think through your situation before you act, it may help you move forward. 

Remember, what you do today could have long-term consequences on your credit and finances. And if possible, it may be helpful to talk to a qualified financial adviser. An expert can help you figure out what to do in a financial crisis and how to make a strategic plan.

Knowing how much you spend—and where you can save—might make it easier to deal with an unexpected expense or lost income. Here are some steps you can take to evaluate and cut expenses: 

• Review all of your spending for the past two or three months. This should give you a good idea of how much you typically spend—and where your money’s going. You can write down all of your expenses on a sheet of paper, make a list on your phone or use an online budgeting tool. 
• Divide your list into two categories: essentials and extras. Essentials include things like housing, food and utilities. Extras might include things like streaming services and takeout orders. 
• Find ways to cut expenses. Now you know how much money you need to cover your essential expenses—and where you can save. 

Even small savings can add up over time. And once you’re in better financial shape, you might be able to add those extras back into your budget.  

If you can’t pay your bills during a financial emergency, the Consumer Financial Protection Bureau recommends working with your lenders directly. And that includes your credit card company. If you’re a Capital One customer, you can contact Capital One to discuss potential options. 

Credit card companies work every day with customers who can’t pay their bills. And depending on your circumstances, lenders may be able to offer relief in the form of payment extensions or other flexible arrangements. That way, you might be able to avoid having late payments affect your credit score. 

It’s also important to remember that a credit card isn’t a replacement for emergency savings. But it may help you pay for some unexpected expenses or cover essentials. If you’re planning to use a credit card for emergencies, make sure you understand how to use it responsibly. 

You pay for insurance for a reason. So if you’re dealing with unexpected expenses, check to see if insurance can help you cover the costs.

It might help to start by taking a look at what insurance you have. Then, you could check the fine print on all your policies to identify places you have coverage, helping you avoid unnecessary expenses. Here are a few examples of how it can help to know your coverage:

• Health insurance: Your health coverage may offer opportunities to lower your out-of-pocket costs. And If you’ve recently lost your health insurance, you can explore what options may be available.
• Car insurance: If your car was damaged in an accident, your car insurance may help cover the cost of repairs. Insurance may also cover a rental while your car is repaired.
• Homeowners insurance: If a storm damaged your home, your homeowners insurance might cover necessary repairs. It also helps to know the limitations of your coverage. For example, flooding may not necessarily be covered.
• Renters insurance: If you’re renting or subletting your home, renters insurance might help cover things like property damage or temporary living expenses if you’re displaced.
• Disability insurance: If you’re out of work because of illness or injury, disability insurance may be able to provide some income. There may be both short- and long-term policy options. And they’re often provided through your employer.

These are just a few examples. You can always contact your insurance providers directly if you have questions about your coverage.

If you’re dealing with unemployment or have bills stacking up, finding extra income streams or assistance programs might help.

If you’re out of a job, you might be eligible for unemployment benefits—even if you’re self-employed or do gig work to make a living. But it can take some time to receive benefits, so try to start the process as soon as possible.

Looking for a side hustle or gig job while you’re dealing with a financial emergency can feel daunting. But it might be able to help you get back on your feet faster. You could start your job search by exploring industries that are hiring. And learning some of the most in-demand skills could make you a more attractive job candidate.

Finally, depending on your circumstances, there might be other emergency grants that can help, too. If you need immediate help getting food, learn more about how to access food banks.

Adjusting to unexpected life events can be difficult. But you don’t have to go through it alone. If you need help, you can meet for free with a Capital One Money & Life Mentor. 

Money & Life Mentors can help guide you to uncover new perspectives with one-on-one sessions, now offered virtually. The confidential sessions go beyond bank statements, helping you set goals to start living your best financial life—even after an emergency.