Photo by Katie Harp on Unsplash
When unforeseen circumstances throw a wrench in your affairs, panicking is an understandable response. Keeping a level head and working through things logically, however, can save you a lot of long-term hassle. Unexpected expenses can really throw out your budget, but there are ways to deal with them that won’t make the sky fall in.
Plastic is Not Fantastic
When your bank balance doesn’t exactly cover the bills, it can be tempting to reach for your trusty credit card and put everything firmly in the deal with it later pile. The problem with this is that interest rates are often less than ideal and a few swipes of your little friend can leave you spiralling into debt. Instead, consider getting a low interest cash loan. While having to borrow in any form is never ideal, many micro-financing companies have far more favorable terms than standard loans or credit cards.
Trim the Fat
Sure, your Netflix subscription keeps you warm at night, and your takeaway coffee and croissants make mornings more bearable, but are they really worth skipping essentials for? Once you’ve re-balanced your budget you can enjoy all the luxuries you want, but while you’re dealing with an unexpected cost, it’s best to brew your own caffeine and cut out anything you don’t really need.
When it comes to the absolute necessities, it’s a good idea to shop around for the best deal. You’d be surprised how different your grocery bill can be just by saving a little on each item. Obviously you’ll need to factor in time and travel, but if you can put in around the same amount of effort and petrol or public transport fares, then it is best to purchase products at the lowest price possible. It may also be worth considering shopping online rather than in-store if you do not need the products instantly. This will not only save you money on transport, but it also removes distractions and allows you to shop around without leaving the comfort of your sofa. Many companies also offer online exclusive deals which can also help you save money.
While this tip won’t help you right now, it will help you prepare for any future issues that may arise. Each pay cycle, set aside as much as you can in a separate bank account. This should preferably be hard to access and not linked to any of your cards. By separating your funds and setting restrictions on accessing them, you will build up a backup fund for the next big expense that shows up unexpectedly.
Another tip for future proofing your finances is to get insurance on anything that you could not afford to repair or replace out of pocket. While this requires a consistent outlay, premiums will almost always be lower than any cost that will arise due to damage or loss. As with any other large purchase, shop around before committing to a policy, and consider options such as bundling multiple policies to receive a discount.
Most importantly, remember that needing help is nothing to be ashamed of. Even the most financially stable individual can find their budget in shreds when a large, unexpected expense pops up. It is always a good idea to have pre-organized contingency plan in place but for many people, this isn’t possible when it comes to large sums and that’s perfectly understandable.
Follow these tips and focus on doing what you can rather than stressing about what you can’t and everything will work out in the end.