Money Disaster Plan 101: Tips and Tricks for Handling Unexpected Expenses
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Unexpected expenses are an inevitable part of life. But instead of panicking, maybe there're some things you could do now to help yourself in the future!
What would happen if you lost your job tomorrow? Do you have savings to turn to, or would it mean financial ruin straight away? What about your car? Could you cover emergency repairs to keep you on the road? Many of us take on debt when these situations arise, but debt today can turn into tomorrow’s nightmare. But what can you do now to prepare for the unknown? Ferratum have some sensible ideas that, started now, could save you a lot of pain in the future!
Start an emergency fund.
Having savings set aside for emergencies is the best way to be prepared for any eventuality. Open a new savings account and try and fill it with enough money to get you out of trouble if needed as quick as possible. A good example is trying to have three months’ salary saved in case you lose your job. That gives you two months to find a new job and an extra month's income to sustain you while you earn your first pay cheque.
But don’t panic if funds are tight. Even a small amount saved can make a big difference in an emergency.
Money emergencies hurt less if you budget.
It's always easier to find extra money in an emergency if you budget for it in the first place. Create a monthly budget to track your spending against your income, and use it to make as many savings as possible. Knowing exactly what is coming in and out each month also keeps you on top of things instead of getting a shock when a large, overdue bill comes through your door.
Look for potential problems that could escalate, and keep a close eye on them.
You can't predict the future, but sometimes you can get a hint that something major might go wrong and you can prepare for the worst. Boiler acting up? Maybe it’s a quick fix this time, but it could be a hint of future big problems. If your car barely passed its MOT, it's not unthinkable that it might break down one day soon. If the weather report says a heavy storm is on its way in a few days, you might be about to get flooded or lose parts of your roof. Seeing a problem before it develops gives you time to take steps to avoid them completely, or at least have the money ready to deal with them if they do happen.
Check your insurance cover.
Home and contents insurance is a must, make sure you shop around for good deals annually. But don’t forget what else should be on the list. Lots of people avoid taking out insurance for their pets, and regret it when they next need the vet. Insuring your pet will probably only cost a few pounds a month and will ensure you don’t get caught out in an emergency. Our top tip is to read the small print carefully and make sure your policy covers all the eventualities you are concerned about.
Changing how you think about your finances can sometimes be a slow process. Go easy on yourself, make one change to start with, and when you’ve got used to that, make another. It’s easier than you think.
|Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk. Representative example: APR 1270% if borrowing £400 for 4 months. Interest rate: 292% p.a. (fixed). Total amount repayable: £665.48 by four instalments of £166.37. Maximum representative APR: 1604% if full loan repaid after 7 days.|