‘For a rainy day.’ You’ll hear people sometimes say this line in response to the question, ‘what are you saving your money for?’
The rainy day is obviously a metaphor for an unforeseen circumstance which requires you to deal with an emergency expense. But what about if there are two, or even three of these days in quick succession? What about if you’re driving in your car and it suddenly breaks down, requiring a princely sum of money to get it back on the road again?
No matter how secure we think we are in our finances, curveballs get thrown at us all the time. One minute you could be texting your friend to tell them you’ll meet them for a few drinks at the weekend (on you of course), the next you could be picking up your broken smartphone from the ground after it just slipped through your fingers.
Nasty surprises are never welcome, not least when we think about our finances. So how should you cope with emergency expenses, like a broken smartphone or a car that needs repairing? The first thing to do is raid the ‘rainy day’ fund, but if it’s all used up here are some other ways in which you can cope with an emergency expense:
Have a back-up emergency fund:
That’s right, a back-up so that if two rainy days happen within a short space of time, you are covered. If you can, set up a separate account with your financial institution. Ideally, have this apart from your regular savings account and manage it so that you can contribute to this account whenever you please. When you get a windfall of cash at any stage, aim to add a small portion to the back-up fund. This way, if you have to use your savings for a major unforeseen event, you still have a small back-up fund in place.
Decide whether it’s actually an emergency:
One person’s emergency is another person’s minor problem. You need to think rationally and decide whether it is actually an emergency or not. For instance, if you can cope without the use of your iPhone 6 and borrow a friend’s old iPhone 4 for a while until you have enough money, then do that. No, your pictures won’t look as good, but your bank balance might. Or, if you chip a back molar after colliding it with a glass of orange juice while still half asleep, you could wait until you have the money saved up to see the dentist. On the other hand, if your tooth falls out after chewing a piece of toffee, you will need to go to the dentist immediately.
Get a ‘spot’ from a friend:
Friends sometimes help us out of awkward situations. This can be in social situations but also in financial situations. If your friend knows you’re a trustworthy person and that you will do your best to pay them back, it can be like a cash fast loan of sorts. Just use great caution when using this approach; sometimes people who have been best friends for years can fall out over a small loan. Sometimes it is best to avoid using your friend as a lender, but if you are both okay with it, it might help you cope with an emergency expense situation.
Get a ‘Gig’:
Gigs are – besides music concerts – temporary jobs that allow us to earn a little extra income for ourselves. This can be to invest in a new TV or car if we are financially secure, or to earn some cash in an emergency expense situation. Look up local job sites and see if someone is hiring for a short period. If the hours suit, you could supplement your income with a gig doing a temporary job.