If you’re an adult in 2025, you’ve probably lived through at least one financial crisis. Since 2000 alone there’s been the dot-com bubble, the Great Recession and the COVID-19 pandemic. On top of that, layoffs may have impacted your industry more than once.
During financial hardships like these, people often feel too stressed and overwhelmed to think clearly about their options. What should you do when money is limited? How do you choose which bills to cover? Sometimes facing these difficult questions makes people want to simply give up or do impulsive things with their money.
That’s why we’ve put together this simple but trustworthy financial guide. In addition to providing you with specific, actionable tips for navigating a financial hardship, you’ll find a handful of pointers on how you can prepare for (and even prevent) future setbacks!
In This Article
Pre-crisis safety net
Have you ever heard the saying, “Hope for the best, plan for the worst”? This proverb can be easily applied to your finances. When things are stable, it’s important to build a safety net that’s there to catch you if you ever need it.
The best way to prepare for a financial hardship, such as unemployment or a medical emergency, is to build an emergency fund.
You can start by saving a small amount from each paycheck, but the goal is to ultimately set aside three to six months worth of your monthly expenses. Why this amount? Because it will allow you to cover all of your necessities during a prolonged, worst-case-scenario, where you’re not earning any income.
Immediate steps to take during a financial hardship
When things go south, it’s important to stay calm but act quickly. Instead of making impulsive money moves, like emptying out your retirement savings to pay off debt, here are the steps you can take.
1. Contact creditors and utility companies ASAP
There’s more help available than you think, but you usually have to ask for it. When it comes to debt payments and utility bills, the companies you do business with may have programs in place to help you during your hardships. This includes utilities companies, lenders and credit card companies.
If you reach out and explain your situation, they may be willing to defer your payments, temporarily reduce your bill or let you push back your monthly due date. For example, Pacific Gas and Electric (PG&E) offers several assistance programs for struggling customers, including options for discounting your bill or extending payments.
What’s the main reason to take advantage of these special programs ASAP? So you can free up some of your cash to cover other crucial expenses, like your rent or mortgage.
2. Take inventory of your finances
Before you start sending money to creditors or moving cash around, it’s important to take inventory of your financial situation. Take a moment to sit down and assess how much money you have available to cover your expenses. Make sure to include the following:
- Any income or payments you’re expecting
- Cash hidden around the house
- Bank accounts
- Money owed to you that you can collect from friends and family
- Any other financial accounts you can withdraw from with little-to-no penalty
Then, make a list of your monthly expenses so you can estimate how long your money will last. To make sure you don’t miss any expenses, review your last three months worth of bank and credit card statements.
3. Apply for assistance
Another step you’ll want to initiate right away is applying for financial assistance and benefits, such as unemployment, insurance or food stamps (see full table of crisis resources below).
Since the timeline to receive certain benefits can be long, you don’t want to delay. For example, with unemployment insurance, it usually takes two to three weeks to receive your first payment after you file a claim. However, in the state of New York it can take up to nine weeks.
4. Cut your non-necessities
Another way to make sure your money lasts as long as possible is to cut non-necessities from your spending. This includes canceling or suspending automatic payments for any upcoming expenses you can’t afford.
Which bills should you prioritize? If cash is short, make sure you reserve it to cover the following necessities:
- Housing
- Utilities (includes cellphone)
- Food
- Insurance/medical
- Transportation (if needed to earn income)
Crisis resource guide
Emergency resources vary by state and county, as well as by each of your service providers. Here, we’ve pulled together some nationwide options to help you get started on your search.
If you’re feeling hesitant about using these resources, remember that they’re not “handouts” or freebies. Nearly all of them are services you’ve helped pay for through deductions from your past paychecks, and they’re here to help anyone who’s truly in need, including you!
| Need | Program/Service | Contact details | Description |
|---|---|---|---|
| Income replacement | Unemployment Insurance | CareerOneStop.org | Temporary, partial income payments for workers who lost work for reasons beyond their control. |
| Medical insurance | Health Insurance Marketplace | Healthcare.gov | Find out if you qualify for reduced-cost insurance and apply for state plans. |
| Home energy | Low Income Home Energy Assistance Program (LIHEAP) | LIHEAPCH.gov | Assistance with covering electricity and other home energy expenses. |
| Food | Supplemental Nutrition Assistance Program (SNAP) | FNS.USDA.gov | Money that can be applied to cover food costs. |
| Food (for pregnant women and mothers) | Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) | FNS.USDA.gov | Food vouchers for pregnant women, mothers and caregivers of children up to 5. |
| Phone and internet | Lifeline | LifelineSupport.org | Discounts on telephone and internet services. |
| General | Temporary Assistance for Needy Families (TANF) | ACF.gov | Money for housing, food, home energy and childcare expenses. |
| Finding local assistance | 211 | Get referrals for local assistance, including for food, housing, utilities and mental health. |
Path to recovery
After an emergency, you may have some work ahead of you to rebuild your finances. Here are the best steps you can take to ensure you recover as quickly as possible:
- Pay off high-interest debt: Use any surplus you have to pay off credit cards or other high-interest debt (8% APR or higher), such as payday loans or cash advances. If you’re overwhelmed with debt or not sure where to start, reach out to an NFCC-certified credit counseling agency for guidance.
- Rebuild your emergency savings: Replenish any funds you withdrew from your emergency savings. It may take time, but you can start with as little as a few dollars per paycheck and work your way up from there.
- Create sinking funds: Sinking funds are money you save for specific expenses, such as a car purchase or a vacation. Keep this money separate from your other savings, so you’re not tempted to raid your emergency funds to cover the expenses.
Don’t fail to plan
Benjamin Franklin once said, “If you fail to plan, you are planning to fail.” In other words, neglecting to prepare for a financial emergency can actually cause you to get into an emergency.
If you save money for a rainy day, you might be able to sail through without any trouble. Of course, you might not be able to set thousands aside all at once. Plenty of people get started with just $20 per paycheck, or even less. But if you start saving money each pay period, you’ll build a habit that will help you for a lifetime.
Written by Sarah Brady
Sarah Brady is a financial writer and speaker who’s written for Forbes Advisor, Investopedia, Experian and more. She is also a former Housing Counselor (HUD) and Certified Credit Counselor (NFCC).