What are effective ways to manage your savings in a financial crisis?

In my experience, managing your finances in a crisis occurs before the crisis. A lot of financial experts will tell you that you need 6 months of emergency funds. The problem is that life happens to us every 7 years on average. Meaning something unexpected that is going to cost us money is coming for you. Are you prepared for that? It is hard to add more revenue, it is a lot easier to minimize your expenses. Take time periodically and review what is going out. This will help you save up for your six months of expenses. I am not a fan of putting your money in the bank, but I do like having my money in things that are very safe and liquid that are earning interest. Meaning I get easy access to my money in the case of an emergency.

Ok, I love the idea of prioritizing debts, but I disagree with the paying off higher interest rate debts first. I would pay off the easiest debt first and use what I call the snowball effect. Let's assume I have a credit that is $500 and I am paying $50 a month. The moment this credit card is paid off, I have an extra $50 in my pocket each month. I can then apply it towards the next lowest bill. Each time you save a little, it gets applied to the next debt, much like a snowball going down a hill. On top of that, there is an emotional aspect to this as well that helps you keep up the good work. You had a small success and now it is time for another. This little triumph helps you stay on track.

I love liquidity. It means I can easily get to money. For instance, I may own my home (which is great), but getting the funds from the home is difficult. I have to sell it or get a loan. When you have a financial crisis happens, you typically need the money now. You want to look for investments that allow you to access your money quickly. Another characteristic I would look for in an investment that will handle a financial crisis is that the investment must be safe. It is pointless to have your money in something that goes up and down in value. A lot of times, a financial crisis comes from when investments are down. Therefore, it is important that is not just liquid, but safe in all types of economies.

The scary thing is that only 5% of the population is seeking financial advice. Financial advice is not just for the rich. Nobody is going to put a big bag of money on your front door step. However, there are financial strategies are available to get you there in the long run. A good financial expert will be able to lay out a plan. Consider this to be your treasure map for retirement. Without a plan, you are aimlessly walking around. The sooner you start working with an advisor, the cheaper it gets to fund your retirement. I highly suggest that you take a little time out of the year to meet with someone you feel comfortable with. Have an annual meeting with them to see if you are on track.

Nobody likes stress. It is even documented that this can be a silent killer. The best way to handle stress is not making desperate decisions in the moment that are rarely good and will probably cause more stress later. The best way to handle stress is prepare for it. For instance, if I prepare for emergencies before they happen, then when the eventual crisis comes, I have a fund that allows me to weather the storm. When the clouds part and the sun starts to shine again, I have not made any desperate decisions. I just dipped into my emergency fund to get past the crisis. I can always replenish my emergency fund for the next crisis, but at least I did not have to sell something I did not want to sell out of desperation.