Life is never a smooth ride and every now and then life has a way of throwing unexpected financial googly, which sometimes are unpleasant and sometimes disastrous. Catastrophic financial crisis such as medical emergencies, loss in income, debts, household repairs, etc. can leave you scrambling for funds. If the stakes are high, you end up considering the risky options for getting through the emergency. To minimize the ramifications of an unexpected financial disaster, it is best to weigh each situation and find safer substitutes to tap the funds.
While planning for short term and long-term goals, one must be prepared for the unexpected expenses to crop up. Here are some of the tips that will help you prepare for the worst financial disasters:
Savings should be set aside for the emergency fund as it is the best way to be prepared for any contingency. Try to keep six months expenses in this emergency fund so that you can be prepared for any crisis. Don’t panic if the funds are tight. Even if you save a small amount for your emergency fund it will help you through the financial crunch.
Check your insurances
Keep a check on all kinds of insurance such as health, life, automobile insurance which are created to help protect you from financial crisis. Definitely go for a term plan insurance which is the cheapest and most apt form of life insurance that provides full coverage if one spouse expires. Since expected life span is increasing, long-term insurance is becoming more appropriate to protect all the members of the family against high costs.
Create a monthly budget to track your expenses against your income. This would give an idea of where you are over-spending and how you can curtail those unwanted expenditure. Try not to use the credit card as this would put a massive pressure on you end of every month to clear out a chunk of your funds.
No planned purchases
During the time of financial crunch, try not to go for any planned purchases. If you are saving up for either a home, or a vacation, or home furnishings, or a car/bike and are faced with a financial emergency, please do put the planned purchase on hold. The savings that were made in the name of the planned purchase can help you in the time of need.
Sell things that are not needed
Nowadays it’s easier to trade in your used items for some extra cash. Apps such as Quirk and OLX help you sell your old items which you do not need and get few bucks to help you through a cash crunch.
During an emergency, it’s very easy to forget about the long-term financial planning and only look at getting through the crisis. It’s best to stop and rethink about the problem. Try not to get caught in bad debts as it would be very dangerous for the long-term credit health and financial stability. Do weigh all your options, try alternative yet safer money-making solutions and save for the emergency fund to keep the financial crunch from making a big dent into your life.