A storm blows a tree into your home, a terrible driver crashes into your car, or a medical diagnosis means you now need treatment.
All of these things can happen to anyone in the blink of an eye – and they’re all classified as financial emergencies. Why? Because they suddenly mean you have a lot of money to spend in a small space of time. Whether you’re paying for repairs or trying to fund an essential medical treatment, financial emergencies put a big strain on your finances.
How do you pay for things like this without disrupting your personal finances and causing further complications? It’s a potentially devastating time, but these ideas will help you deal with the monetary side of things:
Dip into your emergency fund
If you don’t have an emergency fund, then you’re lagging in the financial savvy standings. It is the most important way to save money – the key is in the name; it’s literally for situations like this.
An emergency fund exists to sit in the background and collect money over many years. Then, when a financial emergency strikes, you dip into it, take some money, and pay for the emergency. Some emergencies are covered completely by this savings pot, while others may be too much. Regardless, it lightens the burden on your personal finances and prevents you from spending too much money, so you can’t keep up with the monthly bills.
Opt for a quick loan
What if you don’t have an emergency fund – or it’s far too small to handle your emergency? The next best idea is to apply for a quick personal loan. Some lenders will ensure you receive loans on the same day, meaning you have instant access to all the cash you need. Use the loan to pay for the emergency and then focus on repaying it as quickly as possible.
Make sure you check the terms and conditions before getting any sort of loan. You don’t want to be tied into something with a crazy interest rate that ends up costing way more than you bargained for.
Use your credit card
Alternatively, you could call upon your credit card in a financial emergency. It’s one of the most unknown benefits of credit cards – they give you a financial buffer when you need to spend a lot of money.
Your credit card balance doesn’t have to be paid for another month. Even then, you can pay off part of it to spread the costs of this emergency payment across many months. If you do opt for this method, then it’s wise to avoid using your credit card until you’ve paid the full balance off. Perhaps you can do this by the repayment date, or maybe it’ll take a few months of minimum payments. Either way, not using your card again will prevent the bill from rising – which is how most people end up with credit card debt.
Financial emergencies are scary, but you can get out of them with minimal stress. The emergency fund method is comfortably the best, so be sure you start saving money now in case a situation happens in the future.
