Dealing with a Financial Emergency: A Quick Guide
We’ve all been there; we have a tight monthly budget with everything planned, only to see the plan shattered by an emergency or an unexpected expense. For someone who live from payday to payday, even the smallest unexpected expense can turn into a big problem.
Not all expenses can be anticipated beforehand. Unexpected expenses and emergencies are also more difficult to handle when you don’t have enough savings to use. Worry not, because there are still some solutions to help you deal with expenses that throw your monthly budget off balance.
As soon as you realize that you have a sudden expense to cover, take steps to reduce other expenses immediately. The sooner you start saving, the sooner you can return to your normal monthly budget after the emergency. Review your everyday expenses and be prepared to cut all expenses that are not absolutely essential.
Depending on the emergency that you are dealing with, cutting expenses can help you raise the money you need. Even if you can’t, reducing your expenses is still important, because it allows you to restore the balance of your monthly budget over time.
Non-essential expenses are the easiest ones to cut completely. Remember that no amount is too small to save; every step you take to reduce your expenses gets you closer to recovering your personal financial state and returning to a healthy cash flow.
Review the Situation
Before you move ahead, you also want to take the time to understand the situation you are in. How much is the financial emergency costing you? Do you have the money to cover it or do you need to raise funds for the emergency? More importantly, what is your plan to return to your normal, balanced personal financial state?
Let’s say your car broke down and you need to get it repair immediately. After talking to a mechanic, you get an estimate for a repair of £500. Spending £500 on car repair is beyond your budget, but not fixing the car is not something you can afford to do; you rely on the car to get to work and make money.
The situation may seem difficult and impossible to solve but understanding it will give you the right options to work with. You know you can get the car fixed for £500, which means you can review whether fixing it is a good move to make compared to other solutions such as taking public transport.
Weigh Your Options
Covering the emergency expense itself is not as difficult as you may think. The bleak situation is easily rectifiable when you know the right solution to take. You can, for example, ask for friends or relatives to help you with the £500 repair cost. Borrowing from friends or relatives is not the most comfortable thing to do, but you can be more flexible with the loan and repaying it.
You also have payday loans as alternatives. Thanks to the growing market, you can apply – and get approved – for a payday loan in a couple of hours. You can borrow anywhere from £100 to £10,000 depending on the lender you choose to work with. Even better, the loan will automatically get repaid the next time you receive a pay check.
Payday loans are made for dealing with financial emergencies. They are short-term loans that you can use for a couple of weeks. You also maintain that extra flexibility; the payday loan can be extended to up to three months if you still need time to recover from the unexpected expense. The straightforward cost structure makes this type of loan even easier to use.
Recovering from the Emergency
Dealing with the financial emergency is only the beginning. As explained previously, getting the £500 you need to repair your car is easy. Once the car is repaired, you can return to your normal schedules and continue using the car to get to work.
However, you still need to think about restoring balance in your budget. After all, you have a £500 loan to repay, so it is time to make some changes. The expenses you cut earlier are prefect sources of additional funds for loan repayment.
You can search for additional income to help repay the loan faster. Freelance work, paid projects, and other opportunities to make money are widely available online. The extra money you make must go towards repaying the loan. The goal is to get it repaid as quickly as possible.
Once the loan is repaid, you have the option to continue saving or to return to your old spending habit. The former is certainly the better option of the two. Since you are already accustomed to sticking with the essential expenses only, you can save the rest of your money for future emergencies; no need to worry about unexpected expenses again when you have enough in your savings account.