Most people know the value of having an emergency fund to help mitigate unexpected financial difficulties. With it, you can weather any financial storm.

But what happens once the storm is over and your emergency fund is at zero? How do you rebound fast to prepare for the next emergency?

Solution: Personal Financial Recuperation Plan (FRP)

The FRP is a roadmap to returning to financial stability. A well-planned and well-executed FRP will guide you in increasing your savings, your assets and your income.

Here are nine steps to create your own FRP.

Step 1: Acknowledge and accept your present financial situation.

First, get a grip on your emotions. Allow yourself space to grieve and let any bitterness run its course.

Remember that you are still alive here and now, and it is time to quickly take charge. Look at yourself in the mirror and say: “I need to do this and I can do it.”

Step 2: Get a status update on your current finances

Get a detailed overview of your existing financial status. Start by answering these questions:

• What are your assets?
• What are your debts? Who are the creditors? What is the balance outstanding? What are the due dates?
• How much savings must you have to make you happy again?
• What is your monthly income? Where are the sources?
• What is your monthly spending?
• What is your credit rating?

Step 3: Come clean about your financial situation

Don’t keep this misery private because of your ego. Instead, accept whatever help is offered, but also commit to work twice as hard to earn more money.

Open up about your current financial situation to those you trust. They may assist you financially or provide you with ways to make money and get you back on your feet.

Step 4: Set financial objectives

Develop short- and long-term financial goals to help you to stay on track. Over time, these priorities will help you reassess your budget and adjust your spending and savings accordingly.

• Get your emergency fund back on track

This should be the number one priority. The general rule is three to six months’ worth of your living expenses. Save more if you can. Some people have twelve months’ worth.

Go slow. Perhaps start with three months’ worth and as your finances improve, revise it progressively to six, then nine and finally 12 months.

Your target and timeline depend on your earning power and lifestyle. You can save more and faster if you earn more and spend less.

• Continue to invest

A recession doesn’t last forever. So, while striving to handle your current needs, don’t put your long-term financial wellbeing at risk.

When your emergency funds are in order, set medium- and long-term savings targets. Save for a holiday or house repairs. From there, optimise your investment prospects elsewhere.

The most potent investment weapon open to investors is compounding interest or interest gained on your interest. Use it while time is on your side.

Step 5: Re-budget

Change your budget allocation. Restore financial stability through saving and investing further. Review your existing budgeting strategy and find ways to keep costs low and save more money.

• Rank your spending

Since you have less money now, plan your expenditure in greater detail. Spend only on what matters most – your needs, not your desires. And if you need to pay off certain loans, focus on the debt with maximum interest rates.

• Earn more

Seek additional sources of revenue. For instance, work with a ride-sharing programme, take up part-time work, or freelance. It will speed up your path to financial recovery.

Step 6: Contact your creditors ASAP
You likely can’t pay all your debts on time. So, contact your creditors and negotiate a new payment agreement that you can abide by.

All your lender wants is their money. If you call them before the due date, they will surely consider your request. Otherwise, you have limited options if the debt falls under the collection department.

Step 7: Execute your action plan

Action is the enabler that transforms objectives into concrete results. You must take action.

Many people dream of changing their financial circumstances, but few take meaningful action. Refer to your plan and act on it.

Step 8: Conduct monthly budget reviews

As time goes by, you’ll expand your budget and remove some of your spending restrictions. Review your expenses every few months, or as you see fit.

Adjusting your budget is also a great way to understand where your finances are. How ready are you for financial danger? Are you on the path to reach your objectives?

Here some tips on what to do in a budget review:

• Compare actual and planned expenditures
• Estimate additional income and expenses
• Go over your financial targets
• Make adjustments to your budget to suit your needs
• Determine and clean up budget leaks
• Review your budget every month and every year

Step 9: Seek help from a licensed financial advisor

Whatever your financial problems, a skilled financial advisor can help you. Perhaps you are unsure of your financial literacy or don’t have time to commit. The best option is to seek the help of an external expert.

This article first appeared in MyPF. Follow MyPF to simplify and grow your personal finances on Facebook and Instagram.