During your lifetime, you never really know when you are going to be hit with a financial emergency. Perhaps your car suddenly breaks down, you need to undertake some essential work on your home or you even lose your job. While you can never fully be prepared for these events, you can equip yourself to handle them in the best way possible. Here are just a few of the ways that you can do this.
Discover What You Are Responsible For
Before you pay anything, it is worth double checking that you are actually responsible for the expense. For example, if you are renting a property, it may well end up being your landlord who has to foot thebill. Perhaps something breaks, but you have it covered under the warranty or insurance. You may well find that what seemed like a huge expense is not something that you have to deal with after all.
Create an Emergency Fund
Building up some savings to cover any unexpected expenses is a sensible idea. Ideally, you should aim to have three to six months of living costs set aside so that you have the time to deal with all manner of situations which may arise. Otherwise, you
could make room in your budget each month for unexpected costs. If nothing arises that particular month, you could set the money aside for a future occasion.
Delay a Planned Purchase
Maybe you have been saving up for a new car or kitchen remodel, but if something more urgent comes along, you may have to forego this purchase to deal with the pressing situation. If you raid your rainy day fund, you need to make it a priority to replenish this money at the earliest possible opportunity. Unfortunately, sometimes in life, it never rains, but it pours.
Use the Sharing Economy
The most obvious use of the sharing economy is by selling your old things online, and there are plenty of websites which make this straightforward. However, there are also plenty of other methods of making that extra bit of cash including renting out a spare room, offering driveway and storage space or providing a ride-sharing service. Ultimately, it is worth doing some research to find out what your different options are.
Consider Forms of Debt
Going into debt is obviously something that you need to be very careful about, but it is worth examining further the ins and outs of applying for a personal loan, so you know that you always have this option to fall back on. Make sure that you are fully aware of important details like interest rates and how soon you need to make your payments.
These are just five ways of handling sudden expenses in the most effective way possible so that you are fully prepared for the financial uncertainties that life brings. Essentially, you should explore all the different options out there before settling on the one that is right for you.