Unexpected expenses are just that…unexpected. With many of us surviving on a tight budget, finding money to cover these emergencies can feel overwhelming.
Although working with the best emergency loan provider at such times may seem like the best possible solution, it’s better not have to depend on loans at all.
Borrowing is always an option, but what if there were a way to pay for these unplanned expenses without taking out a loan?
Unexpected expenses can include anything from medical expenses not covered by the NHS, such as eye tests or dental care, to childcare costs, such as school trips or extracurricular activities. Paying for car repairs in the middle of the month, like changing a dead battery or fixing a broken gearbox, can make your budget go haywire.
When we fail to budget properly, the annual tax payment can also seem daunting. So, what’s the trick for finding that “extra change” when things come up suddenly?
1. Expect the Unexpected
Do you know how emergency providers work? They plan and train for the unexpected, so that when an emergency occurs, they are prepared to deal with it.
While you may not be called to solve a national crisis, be prepared to handle your own personal emergency. Begin by making a list of the emergency expenses your household might face.
It should include home emergencies like plumbing and electrical repairs, vet bills if you have pets, car repairs, additional expenses for your children and even parking fines. You must also budget for stolen or broken phones or other important gadgets.
2. Make Monthly Contributions for Yearly Expenses
Taxes and insurance premiums are not really unexpected, but many people fail to account for them in their monthly budget. We end up thinking of them as an annual expense and forget that, one month, it will suddenly be time to pay. That’s when you may find you don’t have the funds.
A good practice is to set aside some money every month for these annual expenses. Calculate the total amount payable, including everything from income tax and council tax to insurance premiums.
For instance, if the total amount is £1,200, set aside £100 every month. This money should be kept completely separate from your household spending and should only be withdrawn when needed.
3. Contribute Towards an Emergency Fund
Emergency funds are meant for unexpected expenses. Begin by making a list of all your essential monthly expenses. This includes rent or mortgage payments, utilities, travel, groceries and any monthly debt repayments.
If the amount is £5,000 a month, a single household would need to set aside six months of essential expenses, which comes to £30,000. For families with children, it should be at least nine months of expenses set aside.
You must diligently contribute to the emergency fund and make sure you don’t touch it for anything that doesn’t count as an emergency. So, if there is a car breakdown, withdrawing money from this fund will be cheaper than borrowing.
4. Cut Back on Discretionary Expenses
Check your bank statements and review your budget to identify non-essential expenses, such as unused subscriptions, regular dining out, Uber rides, and buying your coffee. Find more sustainable and affordable alternatives to these expenses.
A gym membership you never use should be given up, while you can get fitter through jogging, walking and eating healthier. Regular takeaways can be easily replaced with meal planning and cooking at home. While Uber at night might be a necessity, using the underground or buses during the day is a more economical and eco-friendly option.
Small changes can make big impacts on your monthly budget, helping you find extra cash that can then be directed towards an emergency fund or making monthly contributions for annual expenses.
5. Increase Your Income
Unexpected expenses appear less scary when there is enough money. Side hustles are a great way to supplement your income. You can try dog walking, pet sitting (if you are comfortable with animals), babysitting, or even working as a freelance photographer.
Upskilling yourself can also help you get better-paying jobs or get a promotion ahead of your coworkers. Increasing your income helps you be better financially prepared for emergency expenses and unexpected bills.
Final Words…
Emergency expenses come out of the blue and can easily set you back by a few hundred pounds. The mental stress of this additional expense can be even more debilitating. The more money you save today, the better prepared you can be for tomorrow’s unexpected expenses.
Payday or short-term loans can be an excellent financial tool for such trying times. However, before borrowing, try to utilise your emergency funds whenever possible, as this doesn’t involve paying interest or going through the arduous application process.
But when necessary, borrowing from ethical lenders is the best way forward. Do your due diligence and find a lender that offers the best borrowing rates and terms.
Thank you,
Glenda, Charlie and David Cates
