Tips for Dealing with a Financial Emergency Today

Posted in Emergencies on July 15, 2022

It’s impossible to prepare for everything in life. Even if you’re the kind of person who likes to prep and plan as much as possible, it’s difficult to know when an unexpected issue will come along and throw everything out of balance for you.
Unexpected financial problems happen more often than we’d like. It could be a bill that you didn’t know about landing on your doorstep, or a sudden broken appliance that leaves you with an extra expense on your hands. Whatever happens, the important thing to remember is that a financial problem doesn’t have to throw your life into ruins.

Learning how to deal with financial emergencies as carefully as possible ensures that even when disaster strikes, you’ll have a plan in place.

Step 1: Evaluate the Situation

The first thing you need to do is get a complete picture of what’s going on with your finances. Where did this financial emergency come from, and what exactly does it mean? Panicking and throwing a bill away won’t help your situation. Although a little stress is understandable, it’s best to try and stay as calm as possible. Check your emotions at the door and assess everything with a logical head.

Finding the root of the financial problem is a good first start, as this will tell you what you need to deal with. If it’s just one bad bill, then you’ll be out of the woods in no time. If it’s something more significant, then you might need to speak to a financial professional.

Step 2: Consider Your Options

Once you know how significant the financial problem is, the next step is finding out how you’re going to deal with it. There are a lot of different options out there to help you. If you just need to get your hands on a little bit of extra cash until you get your next set of wages, you could consider looking into a short-term loan. If you need a significant dose of cash, then a personal loan might be on the cards.

Long-term strategies can include everything from working with lenders to figure out a payment plan, to mortgaging your house, selling your car, or taking on another job. The right plan of attack will depend on the unique aspects of your situation. Some people can even simply ask their parents or other family members for extra help.

Step 3: Rework your Budget

Once you’ve got an idea of how you’re going to handle the problem with your expenses, the next step is making sure that your budget is equipped to handle the change. If you’re going to be paying off a loan in the months ahead, then you’re going to need some extra cash aside so that you can make those repayments on a regular basis.

Perhaps you could think about changing your budget so that you have more money to put aside to the potential financial issues that you’re facing. If you’ve forgotten to account for a monthly or irregular expense, can you put a new plan in place to avoid having this problem happen again in the future?

Making sure that you have enough cash to spend on your emergencies will mean assessing your budget carefully and thinking about what you should prioritise. For some people, it will be crucial to keep extra money aside in the savings account for their future home. However, if that’s stopping you from paying must-have bills right now, you’re going to need to compromise.

If you can’t deal with the idea of changing your lifestyle, or adjusting your priorities, your only alternative option could be to seek out an additional source of income.

Step 4: Create an Emergency Fund

Right now, you probably won’t be in a position where you can start thinking about things like extra savings and emergency funds. However, once the problem you’re facing right now is dealt with, it might be a good idea to reconsider your options. Although it’s not always easy to find extra cash that you can put aside on a monthly basis, you’ll appreciate your emergency fund when you need it.

This last issue will give you an insight into the kind of emergency fund you’re going to need. Most experts recommend having at least three months of your wages in savings, but it’s up to you to decide which number you feel the most comfortable with. Remember, it’s going to be difficult to build this fund initially, so don’t panic if it feels like it’s taking a while.