A 2019 report by CBNC indicated that roughly 67% of personal bankruptcies are related to medical bills. The study also showed that around 500,000 families declare themselves bankrupt annually because of uncontrollable medical expenses. Uncertainties such as a child’s sickness could easily leave one in financial uncertainty. However, having a solid plan could ease the financial burden and help one regain stability. Below are tips on how to manage your finances after a life-changing experience.
Identify the Most Urgent Needs
When medical expenses leave one in heavy debt, they should begin by pointing out their biggest challenges. Essentially, this step involves focusing on the factors that need the most attention. These could include monthly bills, retirement savings, or even reducing credit card debts. Although the medical debt could leave one with many financial needs, they should keep this list short. Identifying three or four immediate needs could help them feel less overwhelmed.
Prepare a Debt Plan
An unexpected medical expense could easily leave one in a financial void. This is particularly the case if the treatment process took longer and involved multiple procedures. However, in some cases, families have to make a life-long financial plan, if possible, when taking care of someone with special needs. One of the most common conditions families have to live with is cerebral palsy. In such cases, seeking financial assistance to support a loved one with CP is the best option. Furthermore, paying debts as soon as possible helps save money and prevents debt accumulation. Also, a critical aspect of reducing debt is cutting down one’s expenses.
Adjust Spending Habits
After identifying the most immediate needs, one will be in a good position to reevaluate their spending. The reevaluation will also enable them to devise ways of living within or below their means. Often, this means adjusting lifestyles, eliminating unnecessary spending, and using saved funds to settle debts. Fundamentally, they have to learn to spend less money than they make. For instance, one could call their utility companies and negotiate for lower bills through billing plans. It could also mean cutting spending on bottled water, routine salon visits, or buying new clothes. The reduced spending will enable one to escape financial struggles and attain their financial goals.
Despite the financial challenges that accompany unexpected medical expenses, one doesn’t have to remain desolate. With the right plans, one can recover and even improve their financial status. Financial recovery implies an increased focus on lessening financial burdens, not worsening them.