At times, unforeseen expenses can throw a real spanner in the works and no budget is foolproof enough or immune to its impact. While this financial disruption can be a real shock and create stress, there are ways to manage your financial needs if such a situation arises. The good news is, that you can plan ahead for some of these curveballs regardless of the nature of the expense.
An emergency fund is especially relevant in this regard as it’s specifically created to tackle urgent fund needs. It’s a useful cash reserve that limits the possibility of going into debt and ensures you have greater security.
An effective budget is perhaps the most obvious solution in such circumstances. Unexpected expenses notwithstanding, it can easily help you be in better control of your financial health. Successful budgeting improves financial resilience and confidence in the face of monetary disruptions – that’s a given.
There are other ways, however, to be financially savvy when dealing with unexpected expenses. In this article, we’ll show you how to smartly tackle these expenses and minimise financial stress!
1. Borrowing from Direct Lenders
Time is of the essence when it comes to meeting unexpected urgent expenses. Generally, this means you don’t have much time to spend drafting loan applications or walking in and out of banks wondering if your loan will be approved.
You can avoid this tedious process and save precious time by considering borrowing from a direct lender. Direct lenders have affordable and low-cost credit options that are suitable to meet urgent and unavoidable expenses. They can offer short term loans that are personalised to your financial situation and offer greater flexibility in terms of repayments.
Moreover, direct lenders are easily accessible online, especially when you’re short on time, allowing you to avoid unnecessary paperwork. Borrowing from them provides quick access to funds, which makes this an excellent option for covering emergency expenses.
2. Loan Options to Consider
While short-term loans are ideal to handle unexpected expenses, you could also consider other alternatives from credible lenders. Emergency loans are specifically tailored to manage unforeseen expenses.
It might be a better idea to consider approaching credit unions for a personal loan. They are a low-cost alternative compared to emergency borrowing. Furthermore, credit unions are more likely to offer free insurance, flexible repayment options, lower fees and and fairer terms and conditions.
You can also consider a payday loan or a salary advance if you are employed. Payday loans can be a good option as you have until your next payday to make your loan repayment. This buys you time and meets your urgent fund needs. However, loans issued by credit unions, non-profit lenders and direct lenders would be your best bet as there’s comparatively more flexibility and lower costs associated with it.
3. Consider Selling Items Second-Hand
Selling items on the second-hand market is a practical way to earn a few pounds quickly. It’s also an excellent way to declutter your surroundings. Create an inventory of all your items and assess them for their resale value. This helps you take stock and gives you a good idea of items which can be valuable on the resale and second-hand market.
Statement jewellery, designer clothing, collectables, souvenirs, and electronic items like smartphones or laptops are likely to retain resale value. Items in good condition are likely to fetch you a higher price. Sell your items on a suitable resale platform to ensure you’re getting the best prices for your goods.
Second-hand marketplaces and local stores are great options. Vinted, GumTree, and Ebay are well-known platforms and are loved by customers for second-hand items.
4. Let Go of a Planned Expense
Planning for future financial goals is an excellent way to manage your expenses. It is one of the basic goals of an effective budgeting strategy.
However, when you are struggling to meet an urgent expense, it might be a good idea to let go of a long-term financial goal in lieu of tackling a more urgent expense. For example, savings allocated for a future holiday abroad can be used to meet your emergency.
This helps in accessing funds easily and quickly without the need to consider borrowing, which can be expensive not to mention additional spend to account for. You can always reset your budget after the emergency is over and plan it all out more thoroughly, by prioritising savings for an emergency fund.
5. Borrow from Family and Friends
You can consider borrowing from family and friends as a last resort. While this may not be the best option, it can be helpful to check with them. An open discussion about your current financial situation and your emergency can help you receive solutions as well as the funds you need. However, you should be mindful that your urgent expense doesn’t become a financial burden for them.
You can lay the terms of borrowing and repayment and have it written and signed by you. This will be reassuring for them and hopefully will not strain your relationship and bond you have with them.
Additionally, it’s important to express your gratitude and to let them know that you aren’t taking their help for granted. Borrowing from family and friends can be a tricky area to navigate but can be managed better by being sensitive and respectful.
Conclusion
While financial emergencies can be stressful to manage, having an emergency fund or dipping from your savings can be a helpful respite.
However, everyone may not be as well prepared to meet urgent expenses. By considering other options like borrowing money from family and friends or credible lenders, you can alleviate your financial stress.
We hope this article has helped you better understand your options to tackle and meet unexpected expenses.