Have you considered how a loss of income will impact your finances? A loss of income can result from a job loss, pay cut, injury or illness. It's not something that many people want to think about. Isn't it better to be prepared for the possibility than not? Here are some tips to help you prepare.

Building up your savings will help you weather the storm if the unthinkable should happen and you have a loss of income.

Let's begin by asking some questions.

Do you know where your money is going every month? Do you have a budget? Do you have an emergency fund or savings? Will it cover at least 3 months of your normal expenses?

Answering these questions and putting a plan in place can help you weather a loss or income or financial emergency.

If you have an emergency fund that will cover at least 3 months of your normal expenses, congratulations. Even though you've made saving a priority, you may find more tips below to help you save more.

A Budget Helps to Manage Your Finances

Do you have a budget? A budget will help you manage your finances so that you can save money to meet short and long-term goals. Those goals might include a car, house, vacation, college, or retirement.

To make a workable budget, start by writing down all of your expenses for at least a week, though a whole month is better. You should account for every penny you spend because small purchases add up. By tracking your expenses over that period of time, you can see where you money goes. Next, make a list of all your monthly expenses such as:

  • housing – rent or mortgage
  • utilities – electricity, gas, water
  • car – loan payment, insurance, maintenance, gas
  • debt reduction – credit cards, student loans, other loans
  • transportation – parking fees, bus fares, train fares, ride share
  • groceries
  • phone
  • internet
  • entertainment – cable, streaming services, apps, songs, books, movies

This worksheet from consumer.gov can help.

Save at Least 10% of Your Income

A smart budget includes a savings component. A good goal is to save at least 10% of your income.

Remember that list of expenses you wrote down, use it to see where you can find savings.

13 top areas where you could be saving:

  1. Gym Membership
    Have a gym membership you don't use? Cancel it and put the money in your savings account instead.

  2. Subscriptions
    Cancel subscriptions such as magazines, newspapers, online accounts that you don't read or use.

  3. Review Your Entertainment Choices
    For example, do you still need a cable subscription or will one or more streaming services meet your needs for less money? Do you need the premium version of music channels or is the free version just fine?

  4. Prepare Your Meals at Home
    Prepare most of your meals at home instead of eating out. Take your lunch to work most days. A bonus is that you can make healthier meals at home and save money, too.

  5. Stay Mindful of Your Small Purchases
    Small purchases can add up. Set up a budget for apps, songs, books, movies, and similar items and stick to it.

  6. Buy Store Brands
    Consider buying store brands instead of name brands whether groceries or clothing. Save money without giving up quality.

  7. Compare Products
    Expensive doesn't always mean better. Always compare products to determine what best meets your needs and your budget.

  8. Review Your Tax Refund
    Instead of giving the government a loan, adjust your withholding so that you can put more money in your savings account.

  9. Save Automatically
    Set up a monthly transfer from your checking to savings or have a portion of your paycheck deposited directly into your savings account.

  10. Do an Energy Audit
    Having an energy audit performed can help determine the energy hogs in your home and what you can do to reduce your bill. Many utility companies will do this for free.

  11. Choose the Cheaper Movie
    Find movie bargains, such as during a specific time of day or theater.

  12. Skip the Plastic Bottles
    Use a reusable water bottle instead of buying individual bottles. Use a filter system, such as a pitcher, bottle, or faucet for refills.

  13. Buy in Bulk
    If storage is available, buying in bulk can offer big savings. A great product to buy in bulk is paper products. However, it’s important to note bulk is not always the best option for products that have expiration or use by dates and that you won't use up quickly.

For more tips, check out 54 Ways to Save Money from America Saves.

What if your budget is too tight to save much and the tips above haven't helped? Then you may benefit from talking with a financial or credit counselor. A counselor can help you create a budget and make a plan to pay down your debt so that you can start saving. These tips from the FTC can help you choose a credit counselor.

Building up your savings will help you weather the storm if the unthinkable should happen and you have a loss of income.