It’s understandable if you’re unprepared to meet unexpected costs in this economy. While having an emergency fund is the best way to buffer yourself against urgent expenditures, it’s not always possible to save enough. In uncertain times like these, it’d be wise to consider ways to stay financially afloat.
Come April, with a rise in minimum wages, you can expect an increase in take-home pay, which should provide some relief. You can use this to build a savings account or set aside a few pounds for an emergency fund. However, in the interim, if you’re struggling to make ends meet due to unexpected expenses, it’s crucial to find some ways to stay afloat and manage your finances better.
In this article, we’ll discuss 5 ways you can be financially resourceful and stay afloat when you have to deal with unexpected expenses.
1. Cushion Yourself with an Emergency Fund
Unexpected costs can be tricky to deal with, sometimes even with the most well-planned budgets. This is because of the uncertain nature of such expenses. Unlike planning for monthly expenditures, emergencies can rear their heads at the most inopportune times. However, this is exactly what emergency funds are designed to handle. You’d be amiss in your budgeting if you didn’t set aside a few pounds for this purpose.
Emergency funds are typically a few months of essential expenses. But setting aside even a modest amount can make a huge difference when unexpected costs arise. Depending on how much you’re able to save, you can choose to build up your emergency fund over time with small contributions.
2. Use Your Credit Options Judiciously
With recent government reforms to protect borrowers from exorbitant interest rates and predatory lending practices, you can consider borrowing credit safely. While the loan market is filled with a variety of credit offerings, you must consider the impact such borrowing can have on your credit history. Some short term loan solutions can be ideal to manage unexpected costs, but it’s important to do your due diligence where possible.
This is because short term loans can often come with high interest rates. It’s therefore essential to check for low-cost payday loan alternatives so that you don’t burden yourself further financially. Use your credit options judiciously and only when you’ve exhausted all other financial options.
3. Talk with Your Lender
You can have a hassle-free borrowing experience if you try talking to your lender and negotiate better terms and conditions. This can help you get favourable loan terms and help you manage your repayment plans better. However, it’s essential to maintain transparency about your financial situation and communicate this effectively.
For example, talking to credit unions or non-profit lending organisations can help you access credit options tailored to your financial situation. You can tell them about your financial priorities and discuss your need for funds. They can assist you in determining the best loans with flexible repayment plans. Doing this can help you manage your loan better in times of financial distress.
4. Maintain Flexibility in Budgeting
Financial flexibility is an essential part of effective budgeting strategies, as this can help immensely in tackling unexpected expenses in emergencies. When financial emergencies arise, you can tweak your budget accordingly to accommodate these expenses. This might include cutting back on entertainment and leisure activities or postponing high-priced items for later.
By doing this, you prioritise urgent expenses and essential spending, ensuring every pound is used towards specific financial goals. It can curb unnecessary expenses and prevent you from spending money on frivolous items. You can re-adjust your budget after reviewing it, once you’ve dealt with your emergency. This way you stay in control of your finances even when unexpected costs arise.
5. Consider Selling Non-essential Assets
Selling non-essential items when you need funds can be a clever way of staying financially afloat during emergencies. The second-hand market is growing in popularity, and selling on online platforms can make the process convenient and easy. Whether you have clothes, jewellery, old electronic items or even furniture to sell, you can make a quick buck.
This can help cover immediate expenses in a nifty manner, with the bonus of your cherished old items finding a new home. You’d be contributing to the sustainable life cycle of these items, minimising wastage and earning a few pounds in the process. A definite win!
Conclusion
Dealing with unexpected costs when you’re cash strapped can feel like a challenge. While no one’s prepared well enough for such situations, you can tackle them confidently with a few clever tips and tricks we’ve shared.
A combination of effective budgeting strategies, choosing your credit options wisely, and setting aside some money for an emergency fund can be immensely helpful. We hope this article has proved insightful in staying financially well-equipped when dealing with urgent expenses.