Smart Money – 5 Ways to Tackle Unexpected Expenses
by Arina Smith Finance 02 November 2018
We’ve all been there; everything is going great, and then your car breaks down, or your beloved pet needs an emergency trip to the vet. Even the best-prepared individuals can struggle with their budget when unexpected expenses arise. No-one knows what will happen tomorrow, so it pays to have some coping strategies for when unanticipated costs occur. Read on to discover five tips that will help you prepare for a rainy day:
Sometimes, the easiest way to deal with an expected expense is to get a loan. While borrowing money is never ideal, it is possible to obtain fast loans with no interest. They’re a far better alternative than racking up excessive credit card debt and will alleviate stress by allowing you to manage your debt over time without the crippling interest.
Depending on the type of expense, it may also be possible to arrange a payment plan on outstanding bills or debts. A payment plan can provide you with more time to manage your financial obligations within a realistic budget that allows you enough residual to cover your regular monthly expenses. Be sure not to let your payments fall behind. This can result in penalties larger than the initial charge and land you in hot water.
You’d be surprised at how many creditors are open to negotiating payment terms or restructuring your debt. Many vendors such as utility providers and the like would rather accept a lower amount up front than spend time and resources chasing the full total for years. If you can demonstrate that your circumstances are particularly oppressive, speak with your provider and see if they can offer you some flexibility and relief. Most of them will be happy to work out a mutually acceptable solution.
You know the saying the best defence is a good offence? An emergency fund is s perfect example of this. Try to put a small amount aside each time you get paid in case of unexpected expenses. Little by little you can watch your safety net grow and have peace of mind that you’re better protected in case of an unexpected financial challenge. Be careful to keep your emergency fund completely separate from your current and existing savings accounts. The trick is to ensure that money keeps going in, but you avoid the temptation to pull it out unless there is a genuinely pressing need.
Another wise strategy is to obtain insurance for any costs you feel you wouldn’t be able to cover if they were to arrive unexpectedly. This might take the form of income protection should you lose your job, pet insurance to cover vet bills, or home and contents to protect your valuables. While this option does incur a repeated outlay in the form of monthly premiums, the cost will often be far more manageable than it would be to pay to fix the problem out of pocket when it arises.
No one chooses to have to deal with significant, unforeseen expenses and there’s no shame in admitting you need help to deal with them. Move forward as best as you can and remember that it’s not your fault. However, it’s always wise to be as prepared as possible for the unexpected. With careful planning and preparation, the tips outlined in this article will help make and adverse financial circumstances a little less stressful.