It’s a situation that none of us want to be in. That doesn’t mean that we should just ignore it. It may be that sudden costs spring up at us. That we lose our source of income. That unexpected debts rear their ugly head. Whatever the reason, being unprepared for a money crisis is going to make the situation a lot harder for you. So here’s how you need to consider getting yourself ready in advance so you’re not panicking later.
Store some emergency cash
The first thing you’re going to have to do is set aside your rainy day fund. The most common method of doing that is by creating an emergency savings fund. It’s recommended that you make it between three and six months’ worth of wages in order to be able to tide you over between jobs. In that case, however, it might be safer to contribute towards income protection insurance. That way, you’re definitely a lot less likely to reach into those funds before you need them. Whichever method suits you best, you need to have some cash ready to go. If you’re suffering a period where you have no cash available, it will take you longer to be back on your feet.
Avoid payday loans
Loans can be a great way to get that extra kick of cash when you need them. In particular, if you have a steady income but it’s not currently enough to help you out of your immediate crises. If your credit is stretched thin, it can be hard to get a good loan. The most available kind will be the dreaded payday loan. The kind of interest they charge can have far-reaching effects in your financial future. Instead, consider more responsible loans that are easier to pay off. For example, look at using your home as insurance on online secured loans. If you have the assets to make use of, you shouldn’t ignore them. Used responsibly, they can help you out of plenty of jams.
Kicking bad financial habits
If you really want to be prepared, you need to start acting smarter with your money right now. There are some bad financial habits that might seem okay for now. Habits like forgetting about subscriptions and letting bills come out automatically. When you have money, those costs coming out every now and then can be almost negligible. Combine those bad habits with a strained budget, however, and you are asking for disaster. Pay more than the minimum on your credit cards to avoid getting in the deep end. Check on your investments frequently. Be warier of your finances now so you don’t have to dread them when unexpected costs come knocking on your door.
We hope the points above help you put together plans for how you deal with a crisis in the future. There are more ways out of a bad situation than you might realise. However, by preparing in advance, you won’t have to get too desperate to get the money you need.