I’ve heard a fair amount of stories about people becoming severely ill for long periods of time (ie, not able to work for several months to a year), and how it financially devastated them. I can definitely see how that could happen. Have you ever had a period of prolonged illness and not been financially devastated? What can you do to make that not happen?
I have been in a situation where I was unable to perform normal jobs for a prolonged period (about two years) and managed to come through the experience fairly intact, financially speaking. There are five things which, in my opinion, can give you a good fighting chance to come through a long illness and remain financially okay.
In my experience these five things are friends & family, savings, downsizing, creativity, and insurance.
- Friends and family: This is probably the most important factor to getting through hard times. Having friends or family members who are willing to help look after you when you fall are hard times is one of the biggest components in making through a crises (both financially and emotionally). In almost all aspects of life it’s important to surround yourself with supportive people and, ideally, be a supportive person yourself to others in need.
Whenever possible try to strengthen your ties to friends, family, and your local community. These are the people who are most likely to catch you when you fall – loaning money, offering you an inexpensive place to live when you aren’t working, and helping you network to get back on your feet.
I was out of the workforce for about two years once and the compassion of my family and friends who offered to help out in all sorts of ways was the most important component in keeping me going. Often people at the time pointed out to me that I’d given them a place to stay one summer, or I’d helped them get through college, or loaned money when they needed it. I believe this played a part in the same people being willing to help me when I needed it.
- Savings: One of the easiest ways to get through a financial crises – whether it is an illness, unemployment, or a recession – is to have savings. It’s often recommended people try to maintain three to six months worth of savings in the bank at all times. This is an idea which I completely support and would even go so far as to suggest people should strive for more savings.
This can be difficult because most of us have a tendency to spend what we make; we want to turn money into goods, services, and luxuries. I warned about this urge in an early budgeting tip: spend what you make, don’t try to make what you spend. I also recommended people look at what you can downsize in order to give yourself a financial cushion.
As an example, around 2016 and 2017 I was doing quite well financially. I had a nice little house, strong income, and was enjoying life in the suburbs. Then I looked around at the situation and realized two things: 1. The financial climate was unlikely to last, and 2. I could downsize. I traded the house for an inexpensive apartment and sold off some things in 2018. The difference I was paying for the apartment versus the house went into savings. By the time the covid-19 lockdown and corresponding financial crises hit in 2020 I’d saved enough to ride out two or even three years of unemployment. People who were still living like they were at the height of the 2013-2016 financial upswing were less prepared.
In short: always look at ways you can limit your expenses and try to build up six months or more of savings to give yourself a cushion.
- Downsizing: Earlier, when talking about building up a cushion of savings, I mentioned the benefit of downsizing. While it can be helpful to downsize or sell off things you don’t need any time, it’s especially useful when you don’t have income. You can stretch your savings further if you’re able to reduce expenses and get rid of repeating costs. Do you have multiple vehicles? When you’re sick and not travelling much is a good time to sell off one. Do you have cable TV, a cell phone plan with a lot of data or extra features, subscriptions to multiple streaming services, a Chef’s Plate account? When you are ill and off work is a good time to trim these from your budget.
This is also a good opportunity to eat out less frequently, sell off items you won’t be using in the near future – like an RV, kayak, or extra furniture. Start downsizing and try to stretch your savings as far as possible.
- Creativity: When I was freshly out of work, ill, and unable to do anything which required manual labour or even going into an office, it was a difficult spot to be in. Anything which required more work than walking from one end of the apartment to the other was difficult. Realizing I couldn’t go out and do a normal job, I started brainstorming how else I could make money. Someone who is physically sick can often still find ways to do things which are useful.
In my case, I wrote articles and short stories to submit to online journals and magazines. I offered to help proofread books, I helped people set up websites, offered to assist people doing their income taxes, took refresher courses on programming. Three of my friends, in a difficult financial times, turned to online modeling, babysitting, and painting.
My point is that you might be too ill to work a regular job, and you might not make enough money to maintain your usual lifestyle by doing odd jobs from home. However, it is possible (especially in these days of remote work) to do enough side gigs to buy yourself a little financial relief, a little more time. Even if you only earn a month’s worth of normal income every three months, that gives you the ability to extend savings which would keep you going for six months to eight months. Every bit helps when you’re trying to recover.
- Insurance. While this isn’t an option I’ve personally used, there are a number of insurance products on the market which will cover illness and disability. If you fear being in a position where you may be unable to work for extended periods, there are insurance packages which will cover you in case of sickness or disability. This can be especially useful if you don’t have family or friends who would be able and willing to support you should you be unable to work.
The real key in surviving any financial crises, whether it is brought on by recession, illness, or another problem is to be prepared. Try to save up a cushion of money, look at insurance options, try to maintain positive relations with people who you trust to help you in times of need, and look at expanding your skills. You never know when you might need to try a new approach to work or dip into savings to get through a difficult time.
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