Events can often occur in life that mean we sometimes need some emergency cash. Anything from the loss of a job, reduction in working hours or a health problem can all lead to an income emergency and these situations are just to name a few. Many of us are not prepared to deal with any financial disruptions. Experts say that we should have around 3 – 6 months of expenses saved up in case our own salary or a partner’s salary is affected.
It’s extremely important to, first of all, assess your situation. Don’t panic, this only adds to your stress and sometimes can lead to taking out credit that you may not need or at dangerous interest rates. Think about your expenditure and what you use your money for each month. Work out a budget for yourself and your family, this is a good first step to dealing with your situation in an effective way.
It’s a good idea to have a budget prepared already and it’s recommended to have a budget even when your income is stable. This helps you keep track of your spending and can help with putting money into savings which in turn will help if you ever need something to fall back on.
In case of financial disruption, you should always have a plan of what you can cut back on. Think about any non-essentials you spend money on each month such as gym memberships or subscriptions. You can consider selling your car or trading it in for a cheaper model if this is an option. Going on expensive holidays is also something that could be cut back on – there are lots of cheaper options available that involve a fraction of the cost.
You can give yourself protection against unexpected events by obtaining appropriate insurance cover. Having home, car and life insurance can really help when something out of the blue happens. It can cover those large costs that you don’t see coming.
While you’re financially stable, it’s important to reduce your debts as much as you can if you have them. This will reduce your stress if anything unexpected should happen to your finances. Our expert advisors can talk to you about your debt today – Get in touch.