Unexpected expenses such as pet medical bills or car repairs can occur at any point in life, making it crucial for you to take the right steps and build a financial safety net to rely on.
If you’ve not given it the thought and planning that it deserves, these financial emergencies lead to a more stressful life, where you may find yourself stuck in a cycle of debt.
In this article, we’ll be explaining 6 ways to ensure that that doesn’t happen and you can face the many surprises of life with confidence, without having to worry about your finances.
1. Take a Payday Loan
Also known as short-term loans, these can act as a quick solution to urgent expenses when you can’t pay for them with your current income. The borrowed amount for payday loans has to be repaid on your next payday.
If you have a poor credit score or history, Salad Money’s More Than Your Score Payday Loans may be the right option for you. Here, the credit criteria are more flexible and allow you to take a loan when traditional banks wouldn’t.
While payday loans are helpful in urgent situations, it’s not ideal to always rely on them as they often come with high rates of interest and short repayment terms. Seek financial advice and explore all possible options before you commit to a payday loan, and have a repayment plan in place if you plan on taking one.
2. Build an Emergency Fund
One of the best ways to avoid financial stress when facing unexpected expenses is to have some breathing space for yourself when they occur. You can create this breathing space by building an easily accessible emergency fund.
It is recommended to save up at least 3 to 6 months’ worth of living expenses to create a good emergency fund. However, if you feel that you’re going to be unable to invest that much amount, setting aside a small fraction of your monthly income should still be better than having no emergency fund at all.
When you’ve built a good enough financial cushion to fall back on, you effectively reduce the need to seek a high-interest loan in the future or borrow money personally from friends or family.
3. Get Yourself Insured
Once you get to a point of financial stability in your life, your next step should be to get insurance to protect yourself from emergencies. Investing in insurance may seem like an extra cost, but it can save you much more than that in the future.
Pet health insurance, car insurance, life insurance, and disability insurance are all good options to look at for covering unexpected expenses without suffering a loss out of your own pocket.
4. Explore Side Jobs
Even if you’re confident in your current job’s stability, there’s no harm in having an additional source of income, as it can make you less reliant on loans in case of emergencies.
Side hustles such as freelancing, renting out your spare space, part-time jobs, stock photography, or even investments of any kind can come in handy if you need to urgently pay for any unexpected expense.
5. Use Credit Responsibly
When you’re late on monthly payments such as credit cards, student loans, or utility bills, your credit score gets negatively impacted. While options like bad credit payday loans exist, you don’t want to risk having a poor credit score due to all the negative effects that it can have on your finances.
A poor credit score is going to make it difficult for you to take out loans from traditional banking services and force you to rely on high-interest alternatives. Additionally, your access to housing or job opportunities can also be impacted since some landlords and employers conduct a credit check to check if you’re reliable.
6. Remain Up-to-Date on Financial Topics
It is crucial to consistently educate yourself on the evolving finance trends, loan options, interest rates, investment opportunities, and budgeting strategies.
Follow financial news websites and blogs that cover such topics, listen to podcasts, or even take financial literacy courses if you feel the need to so that you can improve your knowledge of emergency planning.
The higher your understanding of financial management is, the easier it’ll be for you to face unexpected expenses since you’ll be more aware of all the options available to you.
To Sum Up
You can’t predict every expense that you’re ever going to have, as life can be quite unexpected, and you can’t necessarily be prepared for those moments at all times. However, it’s important to at least strive for a future where you’re not stressing over your finances and have a clear plan in mind to pay any unexpected expenses that might occur.
You can create such a future for yourself by remaining informed on all the options that would assist you in such times. Just keep taking small and consistent steps towards planning out your finances, and you’ll be ready for any unexpected expenses that life throws your way!