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Just when you thought you had your head above water a big bill comes in. Or maybe the car has broken down, or your hot water system is on the blink? Unexpected financial hits like that can cause a lot of problems. If you’re not prepared for the unexpected, then you may find cash is too short to put dinner on the table for the family. What you need is a good plan, a family budget, and a way to manage the cash flow should something happen.
Start with addressing your current financial commitments. These will be your mortgage, any contracts for broadband or phones, energy bills, and loans. These expenses are very difficult to reduce or avoid paying. However, keep an eye on your minimum term date. When that date arrives, shop around the comparison websites and see if you can find another service provider that is cheaper.
Now take a long hard look at your household budget. If you’re not using coupons and discount codes to reduce your monthly shopping costs, then it is time to start. Spending more than you need to is wasteful. You can put all of these savings away in an ISA, or other savings account, so you have something for a rainy day. What about your emergency fund? This needs to sit on your budgeting spreadsheet as a monthly expense. It might only be a few pounds, but it will add up and could help out should you be confronted by a big surprise bill.
What can you do if you don’t have enough put away? There are several ways to borrow money. Secured loans tend to offer the cheapest interest rates for larger loan amounts. Credit cards are handy if you know you can pay off the balance by the time your bill arrives. Unsecured loans like those from your bank can incur large interest charges but can often be applied to your account quite quickly.
You could also ask your employer for an advance on your pay or see if they offer employee loans. If you have anything of value, why not see if you can sell it? Try local ads in your community, or pop it on an auction website. You might be able to earn extra money to cover the surprise bill by taking extra hours at work, an additional part-time job, or working from home. Ideally, you would have your savings account in place and healthy enough to cover the bill, but real life often scuppers good intention!
Cutting back quite drastically for the short term is usually a sacrifice the family is willing to make if times become tough. You can shop for supermarket own brands, dine at home and enjoy home-cooked meals prepared from scratch. Can you live without your TV subscriptions for a month or two? What about leaving the car at home to save on petrol? And would you all be prepared to give up your Saturday nights out for a few weeks? Are you financially prepared to take on the financially unexpected?