Life is always unpredictable and no matter how organised you are, you never know what is around the corner. This is particularly true when it comes to your finances. You might have an amazing budget that covers all of your expenses and leaves a little left over for fun things every month, but what happens when life throws you a curveball and you get hit with an unexpected expense? Things like emergency home repairs or a broken down car can play havoc with your budget and if you’re not careful, it could be the beginning of a slippery slope into serious debt. But as long as you are prepared to deal with those financial emergencies, you can keep on top of things. These are the best ways to deal with financial emergencies.
Use Your Emergency Fund
As the name suggests, an emergency fund is there for emergencies. If you have one set up already, you shouldn’t need to worry when unexpected expenses come up because you already have the money there. Unfortunately, a lot of people don’t have an emergency fund and so they find themselves in trouble. If you don’t already have one, you need to start building one as soon as possible. Put a little away each month as soon as you get paid and it will soon build up. If you don’t have the money to spare, you should look into ways to make extra money from home so you can add to your emergency fund and protect yourself in the future.
Dip Into Savings
If you don’t have a separate emergency fund but you do have some savings put aside, you may be forced to dip into that account to cover yourself. It’s not ideal because you were probably saving that money for something else like a holiday or a new car. Dipping into it now is going to push your savings goals back, but you need to think about whether you would rather do that or get into debt.
Take Out A Loan
If you don’t have any money set aside at all, your only option is to get a loan. If you have good credit, you should be able to get a loan from the bank. The only problem is, it may take a while for it all to go through and if you need the money straight away, you may be in need of an instant loan to cover the cost instead. The interest rates will be higher on these loans but you will get the money right away. Just make sure that you can afford to pay it back comfortably before you decide to take out a loan.
Borrow From Friends And Family
If you find yourself in a really difficult situation and you cannot get a loan from anywhere else, you could consider asking friends and family to borrow money. However, borrowing from friends and family can cause big problems in your relationship, so you have to do it the right way. Make sure to set out clear payment terms from the beginning and stick to the agreement.
Ideally, you need an emergency fund in place, but if you don’t have one, you will need to try some of these other methods to deal with a financial emergency.