There are few things in life that are certain, but there’s one thing that you can expect: the unpredictable. Unexpected emergencies are just a part of life and cannot be anticipated. However, we can control how heavily these events impact our financial stability. Whether the unexpected event is good news or bad, it’s always a great idea to be as prepared as you can be in the face of a surprise.
Need help setting aside those rainy day funds? Here are a couple methods to help you better prepare for when those financial emergencies come your way.
Start Saving Now
Unfortunately, having a safe amount tucked away isn’t exactly a common practice. While we all know it’s best to have savings, not all of us follow through with it — not by a long shot. In fact, a recent study showed that more than 16 million UK residents have less than £100 saved. When you’re living paycheque to paycheque, there isn’t much room to save, but there definitely is some!
As impossible as it may feel, it can be done! Here are a few creative ways to cut expenses, track your spending and free up money to allocate to savings, even if you have a small income.
- Use an online budget calculator to make sure you aren’t missing any areas of opportunity.
- Use cash to make as many transactions as you can rather than a credit card, which can be harder to track and makes it easier to overspend.
- Find extra ways to make money on the side and set aside that profit purely for savings.
You can also try one of these unique (and easy) saving strategies to help you get started.
Reallocate Funds From a Planned Purchase
When life is steady, a trip to the movies, upgrading your furniture or other personal purchases are expenses you can easily plan ahead for and are well-deserved rewards for working hard and budgeting well. However, when a crisis strikes, these sorts of purchases need to be prioritised differently.
Take a look at upcoming purchases and see which ones you can forego to help balance out your unexpected expense. While it’s a disappointing choice to make, especially when you’re really looking forward to treating yourself, the best gift you can give yourself is peace of mind. You’ll also have confidence in knowing that emergencies won’t completely unravel the budget you’ve so diligently followed to be able to afford what you were saving for.
Plan for More Than You Think You’ll Need
Most finance experts recommend starting with three month’s salary as an initial savings goal. It’s meant as a way to prepare in case of sudden unemployment, but it also can give you an attainable goal to work towards in case of other unexpected emergencies.
Take your monthly income and multiply it by three. That is the first tier of your savings goal, but don’t stop there! Once you’ve accomplished that, double it (six-months salary) and save to that amount. That is a great achievement! Push forward and work toward a full year’s salary of savings. It may take a few years to accomplish this, but it will be well worth it!
The best solution to dealing with emergency expenses is being prepared in advance. Any one of these strategies described can help you take a proactive stance and keep your finances stable. However, there may come a time when even your savings can’t cover a medical bill, car trouble or home issue. If that’s the case, see how QuickQuid may be able to provide you with the funds you need to help solve your emergency quickly.