Life is full of uncertainties and it’s really difficult to predict the twists and turns. This is never more true when looked at from a financial point of view. It’s virtually impossible to predict when a possible personal financial crisis may occur.
Everything seems hunky dory when your income is stable, but do you have contingencies in place should your income fall dramatically? It’s easy to bury our heads in the sand and assume that everything will be ok, but could you cope if life takes a dramatic change of direction?
You could liken life to a game of Monopoly, perhaps not quite as random as the shake of dice, but it can be very unpredictable. Unless you have a crystal ball (that works!) you will be unable to tell if you are going to suffer a lack of income due to illness, sickness, accident, redundancy or a business which fails. Homeowners may not be able to predict property damage due to flood, fire or theft and what about cars, once they start to go wrong they can become a real money pit.
Whatever financial crisis’s we are faced with, we still need to pay the mortgage, rent, bills and meet living costs, so it’s essential to plan for life’s unpredictabilities. Putting aside some money every month now will help to lower the impact of any future disasters. In fact make building up an emergency fund a priority. If you find yourself in a situation where you need money quickly, try asking friends or family.
If this isn’t possible you made need to look at other funding options such as credit cards and loans. Ensure that you can meet repayments and devise a repayment plan. Finance can be applied for when time is short via loans no credit checks required. This will also be helpful if you have a poor credit score, be sure to check that you can afford the repayments.
Often money is just too tight to even consider saving any, so it is essential to take stock of your whole financial situation in order to identify areas where savings can be made. Read on for inspiration.
Create a budget
Budgeting is a simple concept, however for budgeting to be successful you really need to be in total control of your finances. To do this you need to be aware of all your incomings and outgoings. Compile a list of all your essential outgoings such as mortgage, rent, insurances, loans, bills and daily living essentials. This will highlight to you exactly how much money you need to survive on a monthly basis.
Then list all the non essential expenditure, you may be surprised by the results! The daily coffee on your way to work and the magazines you buy begin to add up. You may even discover defunct gym membership payments or insurance payments for items you no longer own!
Once you have identified where all your spare money is going, you can begin to make savings. Even tiny changes can make a difference, no one is suggesting you live a frugal life not dissimilar to that of a monk, just cut back a little! For example if you enjoy a weekly takeaway, make it fortnightly, take a flask of coffee to work and make a packed lunch.
Try to become a frugal shopper by researching the cheapest outlet for items, this is easy to do via the internet and can actually be quite enjoyable and a little addictive. You will be amazed at how much prices vary for exactly the same item.
By this point you should have made enough savings, so that you can squirrel some away into your emergency fund. Even if the amount seems quite small and insignificant, it will soon start to add up if you are consistent
Take care of debt
Most people are in debt to a certain extent, it is difficult to avoid. Taking on a mortgage, loan or credit card all constitutes debt. Problems start when the amount of debt spirals out of control and you begin to struggle with the repayments. If you can only afford to pay the minimum amount each month, the debt can continue for years and if high interest is accruing payments will increase rather than drop.
Always pay off debt with the highest interest rate first, this is likely to be credit cards, store cards and overdrafts. Take advantage of 0% interest offers and switch balances regularly before the balance reverts back to the usual APR. Be sure to meet payments relating to mortgages and rent as these are literally the roof over your head, discuss any problems with providers as they may be able to offer assistance in times of financial hardship. Any money saved, put into your emergency fund pot!
Are you on the best tariff?
There are numerous comparison websites available online which can assist you in ascertaining whether you are on the best deal with utility providers. Unfortunately loyalty is not often rewarded and it’s better to switch and change providers.
Normally the process is easy, but ensure you are not “lured in” by the promise of a cheap deal, only for it to rise dramatically in the near future, also be wary of any “tie in” periods of time where you will have to pay a penalty to provider if you choose to leave early. If you do your research and reviews, the process should be easy and has the potential to save money.
Mobile phone tarifications and TV subscriptions also vary in price. It is often necessary to play a game with them and say you are going to leave in order to get the best deal. Often the best deals are available to new customers only, but if you threaten to change provider the companies often drop their prices for current customers.
Consider changing insurance companies on a yearly basis, as they notoriously hike up prices to loyal customers. Do your research and if they don’t match what other companies can offer – leave!
By following the above guide you will be able to build up an emergency fund in no time, which will provide financial security for the future.
Take it ,one day at a time!
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