3 Common Financial Emergencies & How Much They Cost
Life is filled with unexpected occurrences and unfortunately, most of them we cannot even predict. Unluckily, financial emergencies always seem to hit at the points where money may be tighter than usual. Therefore causing people to scramble and struggle trying to work out a solution to the dilemma. Often, many people turn to payday loans or short term loans for a quick fix of money. However, unless you have no other option, this is not an ideal solution. Nevertheless, we can easily help ourselves and our finances by trying to prepare for the unknown. Everybody should have some sort of cash set aside from their usual spending accounts and their savings. This way, you are able to build up an emergency fund whilst keeping all your finances separated.
Unless you have been prewarned that you could potentially lose your job, a lot of the time people are completely unaware of the situation until it has approached. Whether your termination is because you don’t suit the role or the business downsizing, preparing for the moment is difficult. Having no source of income is worrying, never mind if you have no income and no savings. If you lose your job and have no emergency funds to support you through the situation you could find yourself with further financial issues.
There is no exact amount you can put on this occurrence as everybody has different outgoings. Therefore, try considering how well you would be able to handle redundancy with your current emergency funds.
Emergency repairs for aspects like our homes or cars arent necessarily unexpected as we know they will eventually come. However, we just don’t know when. Therefore, it’s always good to plan for these situations using budgeting methods to help you escape any debts.
One common, more expensive financial emergency in our homes could be the boiler. With winter approaching our boilers will be working harder to ensure that it’s keeping us warm. A survey conducted by Boiler Guide suggests that 15.9% of boiler repairs and breakdowns happen in January, following this there are 12.01% in December and slightly less in November. With the weather being so cold we may be putting extra pressure on our boilers on a daily basis to keep up warm. Not only this, but whilst the boiler is working, the external pipes are freezing, meaning it could be causing potential hazards like blockages. Therefore leading to excess costs for repairs that could vary up to £2,500 if a new boiler is needed. But, if you consider this logically, how will you be able to pay for the repairs needed if the prices are that high?
As mentioned above, these home repairs are not complete shocks to us, we know they will be eventually coming. A lot of the time, each object which potentially needs repairing may begin to show signs of problems early on. Therefore, you are able to keep the costs as low as possible or save as you know it is coming.
Our budgets do not always align with our lives. One week, you may spend way under your budget whereas the next there could be multiple unexpected expenses you are surprised by. Moving away from repairs, job losses and broken essential items, there is much more we need to consider. From large travel costs to even something as small as a gift, the costs can add up. Throughout the year you may find yourself faced with surprising responsibilities which are out of your budget. But, if they’re essential, it’s likely you’ll do everything you can to ensure it runs as smoothly as possible.
For aspects like travel, most of the time when planning a trip we have plenty of time to save up or pay for the package in smaller instalments. However, this is not always an option. Travelling has always been expensive, but, at the moment, costs are higher than ever due to Covid-19 implications. Therefore, you will have to try your best to find the cheapest option available.
With life being so unpredictable one minute you could find yourself living debt-free with plenty saved, and then another you could be struggling. Having some cash available for situations like these listed above will allow you to access a simpler solution during financial emergencies. You need to have your finances under control in order to avoid further money mistakes which could land you in debt.