How to Raise Money for Unexpected Expenses
26.04.2019 by Jack H
Life is far from predictable. Though some unpredictability is great, others, like an unexpected expense, will always hit you when you’re down. Not being able to accommodate this expense can easily put you into debt or put your health at risk.
If your boiler breaks down, for example, and you don’t have the money to repair it, what do you do? Following this guide, you will be able to secure yourself better financially and know where to turn to for emergency cash.
If you own your own home, then you cannot just call up your landlord and request that they fix it. It is you who is responsible for the repair, or worse, the replacement. So how do you accommodate unexpected costs like that? How can you improve your finances and acquire money when you already seem at the end of your rope? Unless you have already done all you can to reduce your expenses, chances are the answers are in your spending habits.
Why You Need To Prepare for Unexpected Expenses
If you were to lose your job today, could you still cover costs like your rent, utilities, and food bills? If you cannot cover these costs for at least three months, then you have a serious problem. Without savings you cannot have financial stability, which means a job loss or an unexpected bill could very easily result in you losing everything.
The stress alone you can experience from living from one payday to the next and not being able to pay for an unexpected expense can take its toll on your health and well being. You don’t deserve that. You deserve to feel stable, and able to take on the world.
That is why you need to do two things. One, to create a budget and stick with it. This budget should help you live comfortably while simultaneously leaving enough money left over at the end of the month to put it away in savings. The second step is to create a contingency plan. Until your emergency fund is healthy enough to support you on your own, you will need to know where to turn to in the event of a job loss or unexpected bill.
Start Saving Money on Expenses
To save for an emergency fund, you first need funds left over. If you don’t think you can operate without being on a tight budget, then put this money away at the start of the month. Either way, to make up for the money you would have previously spent, you will need to analyse your spending habits and find out how you can save money on your expenses each and every month.
If all the saving habits in the world are not enough, it is time to take drastic measures. Moving back home to your parents while you save up, or moving to a flat share could be your next move. Look for a better paying job all you want, but do not live like you already have it.
Thankfully, having a little bit of money left over to put into savings often means being smarter with your purchases. So to start saving today:
Utilities are a great way to save money. For example, you can reduce your heating usage by wearing more layers at home, using blankets, and heating your home only when you need to. If you set it so that it heats up in the morning while your electricity is still working on the night fare, you can save money.
Other easy methods include using a metre, minimising water, changing your light-bulbs, and so on.
Necessities like food are very easy to save money on. To start, make food from scratch. In fact, by planning meals ahead of time you can reduce costs and food waste all at the same time. Buying in bulk is another great way to save money, especially if you can find a zero-waste store. Finding one near you means you can stock up on items in your own containers, and therefore only pay for the product itself.
Reduce Costs on Items
Other ways you can reduce costs is by choosing long-term items over disposable. Instead of buying paper towels, use actual towels. While the upfront cost might be a bit higher, over time you will save a significant amount of money. These long term products can be used all around your house and will help you save.
Cut Out Frivolous Spending
Until you have a healthy emergency fund, you should cut back on frivolous buys. It isn’t permanent, and if you really want you can budget in one or two nights out with friends, but saving should take priority. Do not buy clothes, gadgets, or anything that is not essential. Do not go out and enjoy expensive meals. Find free or budget alternatives to go out. This will significantly boost the amount you are able to save.
Start Saving an Emergency Fund
Emergency funds are essential for everyone. If you do not have one, then you will need to take out a loan to cover emergency expenses. If the emergency expense is significant, then you will need your fund not to cover it, but to keep you afloat just in case bad news comes in threes.
You cannot predict life, but you can be prepared for it, and having an emergency fund is a great start. It might not be enough, but you can easily take out a loan and still have money left in your account to assure yourself you can handle another emergency and make all repayments on time.
Without an emergency fund, you have no security. This will take its toll on you, but you don’t have to let it.
How Much You Need To Have Saved
You need, on average, enough to cover your living expenses from three to six months. Though this isn’t a good way to judge an emergency cost, it can keep you afloat in the event of a job loss. If you do lose your job, then you can comfortably look for a new job without being worried about letting debt pile up.
If an emergency bill comes in, you can also take out an emergency loan and know that for a few months you will be able to make the repayments comfortably. This should give you enough time to find a new job and start putting money back into your emergency fund.
Build Your Credit Rating
If your credit rating isn’t good now, you will want to start building it up. This can make any loans you take out more favourable to you, and it can also give you leverage to reduce current loans like your mortgage. Reduce repayments, you have more money to put into your savings.
Know Where to Go in Emergencies
Saving money and putting those savings into an emergency fund is a smart strategy, but emergencies won’t wait for you to have enough saved over. That is why you need to know where to turn to in an emergency. Top suggestions are:
Friends or Family
Knowing you can move back home to save money is a good assurance to have. Knowing your parents are willing to pay for an unexpected cost and let you repay them without interest is another assurance that can really help keep you motivated.
If you are struggling, however, then it is best to ask for help in advance. Even if you were to go to a friend and ask if you could possibly use their couch while you get back up on your feet if things go south can be enough. Your loved ones want to help, but giving them a heads up and even asking in advance is smart.
Where You Can Get a Fast Loan
Getting a loan should be your last resort, but that doesn’t mean you leave it to the last second. In fact, by researching your options in advance you can find the best provider for your needs and therefore know exactly who to go to when that unexpected cost comes to your door.
If you own your own car, for example, you could secure a fast loan against it. In this case, your car would act as collateral. If you fail to repay the loan, it will be taken away, but this is the last case scenario. What will happen in most cases is you secure a loan against your vehicle, get the money you need, and then start repaying the loan on a monthly basis. You can still use your car as well, so long as you have adequate insurance.
Loans like this are far more attractive for emergency costs as you can secure the money for a lower price, as there is collateral to look at, instead of just your credit score.
Saving up an emergency fund is the best way to deal with emergencies. Knowing where you can turn to if you don’t have enough is the best contingency plan you can have. Never assume you will go through life without issues. Instead, prepare for them, because it is in this preparation that you can find stability and peace of mind.