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May 13

A 101 Guide to Managing Unplanned Expenses

Reading Time: 3 mins

We all know that life does not always go as planned. Similarly, emergencies can be thrown at you without making prior appointments, and the biggest crisis arises in handling them. Are you wondering how to control this without driving yourself insane? Read on to find out. 

How to Handle Unexpected Expenses?

Surviving an emergency is a big deal. The question arises, how to manage these sudden expenses? Here are all the ways you could do it: 

Emergency Fund 

An emergency can strike you at any point in life. Hence, setting aside some money to aid this financial need is important. Put aside some money that can cover three months’ worth of expenses. 

Unused Stuff 

Want to get rid of the clothes you impulsively bought or last year’s Christmas gifts that you never find usable? There are several auctions or thrift stores where you can sell your unused or used items. This is a great way to have some extra cash with you. 

Begin with getting rid of unwanted clothes or other stuff. Along with selling, you can even swap unrequited items with things you can use. 

Additional Income 

Apart from your main job, there are always other means of earning extra income. If you do not have the time to invest in a part-time job, find other opportunities to make extra money online. Surveys and focus groups are one way to aid your needs. You can even generate a passive income or create side hustles out of your hobbies or talents. 

Personal Loan and Credit Card 

Do you have to pay an unexpected bill but do not have access to immediate money? Borrowing the amount can be another option. With the help of personal loans and credit cards, you can borrow the required amount from banks or financial institutions and suffice your monetary need. 

A personal loan is used to fund personal expenses from £1,000 to £25,000. You can take the help of credit cards, but they have excessive interest rates. So, if you do not pay back the debt as planned, you will be burdened with hefty interest. 

Apart from personal loans and credit cards, you can also take the help of budgeting loans 

Family 

If borrowing from an external financial institution is expensive for you, turning to your family or friends can be another alternative. Since lenders charge interest rates depending on your financial needs and credit score, it can be expensive for some people. 

With a family member, you can hardly see them charging you an interest rate. They can also agree to have a lenient repayment approach. 

However, while borrowing money, be careful. If you already have enough debt on your head, going ahead and borrowing some more is not recommended as it will strain your relationship with them. 

Talk to Someone 

If you have no idea of what to do about the financial emergency you are facing, talk to your family, friends, or partner that you trust. It can help you feel at ease and give you an idea of what to do further. 

Weigh in some experts! Financial advisors are ready to help you make financial decisions best suited to your situation. If you feel directionless, you can always take their help. 

Skip Planned Expenses 

Finance is majority about how good you are at prioritising. If you have some money saved for a vacation or for buying something, you can skip it for an emergency. Future plans can wait, but an emergency cannot. Prioritise what is important and act on what is the best decision for you. 

Changing your priorities to aid your emergencies is always a wise choice. You can save again for whatever you plan for your future! 

Insurance 

You can always save for the future but can never be fully prepared for every emergency in your life. And for this reason, there are several insurance services available. 

Insurance provides guaranteed financial security needed to get through a crisis. For example, pet insurance saves you loads of money when treating your unwell pets. Instead of taking a huge chunk of money at once to fund a large need, insurance will take care of it. 

Interest-free Credit 

Depending on your need, you can opt for interest-free credit. For example, a car that is beyond repair and needs to be replaced can come under 0% finance. Even if it is an interest-free credit, you still have to return the borrowed money. So, only borrow the amount you can repay. 

 

Bottom Line

When it comes to financial situations, having a safety net is always a good choice. Save some money from your salary before you start spending, get insured, and start looking for means to make extra income. If you need to opt for a personal loan, make sure to compare loans from different lenders to get the best possible deal. Hope these tips help you aid your unforeseen expenses! 

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. 

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