There are few things more valuable in this world than peace of mind. Although it takes time and effort to sit down with your bills at the end of each month and ensure that you’re following the right financial strategy, there’s always a risk that an expense could come along and hit you from out of the blue. Sometimes it’s a birthday party you didn’t prepare for, while other times it might be paying for a new computer or dishwasher.
Unfortunately, no matter how careful you are, it’s unlikely that you’ll ever be able to make sure that you’re financially prepared for everything. However, there are some things that you can do to ensure that you can handle unexpected issues as well as possible.
Just because you know where you can get a great short term loan, or how much credit you can get for your current score, doesn’t mean that you have to go ahead and borrow money. Think of it like a safety net, you hope you’re not going to need it, but it’s reassuring to have a plan of action in place, just in case things don’t go according to plan.
If you haven’t looked into your borrowing opportunities before now, start reading up on the kind of things you can access. For instance, you might be able to apply for bad credit loans if you don’t have the best score. Alternatively, you can start looking into alternative lending opportunities, like borrowing money from friends and relatives.
Your lending opportunities will be there to assist you when you need to borrow extra money that you can’t get from more convenient sources, like a friend or savings account. In an ideal world, you’ll be able to reduce your dependence on those lending opportunities by building an emergency fund instead. This is a small amount of money you keep in your bank account or savings to help you out if you hit an unexpected fee.
Emergency savings are there specifically for emergencies and nothing else. You’ll need to be disciplined to ensure that you’re not using this money for anything that isn’t completely essential. Usually, it’s best to aim for about 3 months’ worth of income in your emergency savings, but it’s up to you to figure out what’s right for you.
As mentioned above, although you might not want to use them all the time, lending and loan opportunities are crucial at some points during your life. Unfortunately, it’s hard to get the money you need at a rate you can afford when you don’t have the best credit score. If you’ve had a bad time with credit in the past, then you’ll need to jump through a lot of hoops to borrow money again in the future.
On the other hand, you could also have a bad credit score if you haven’t dedicated enough time and effort to building your credit history. If you’ve never had a loan or a credit card, then your credit providers can’t see how reliable you are with your money. Work on maintaining a solid credit score so you can get the best credit options.
If you’re concerned that you might be hit with the odd, unexpected expense, and you know that you’re currently living from one wage to the next, it might be time to adjust your budget. Spending all of your cash on bills each month, to the point where you have nothing to save left over, could be a sign that you’re not really living within your means. Look at your current expenses and ask yourself whether you could afford to cut down anywhere. Do you really need two cars in your household? Could you move to somewhere smaller?
Sometimes, you can even cut the costs of things that you wouldn’t expect to be able to reduce, like gas and electricity fees, just by looking at some different providers. The lower your fixed costs are, the more money you’ll have left over for variable expenses.
Finally, the most important thing you can do to prepare yourself for financial problems, is pay close attention to your mood and mental state. It’s easy to get overwhelmed when unexpected bills arrive, but there are always way to help yourself if you know where to look for them. Be prepared to sit down with your family, or partner, and think about your next step rationally.