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28 April 2020 | 4 min read

8 Tips That Will Help You Through Financial Emergencies

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Many people live paycheck to paycheck. However, it is essential to remember that having monthly savings set aside or creating an emergency fund is not only necessary but is vital to the pursuit of financial freedom. Living paycheck to paycheck means that things are tight when everything is status quo, so imagine how disruptive it would be to your well-being if an emergency were to happen.

Even those who don’t live this way have to review their finances regularly and ensure that they will deal with financial emergencies. But don’t fret, because we have you sorted with these easy to implement steps that will help you through financial emergencies to create a good contingency fund and also, grow your money.

Understand Your Spending Habits

The first step {though easier said than done} is not to panic about your savings but take small steps to realise your goal. Start with listing your expenses on a sheet of a paper by dividing them into two categories, namely essential and non-essential expenses. From now on, you may want to reduce non-essential activities like movies or to eat out {especially if it more than once a week}, to focus on more important priorities. For the next 1-2 months, keep a detailed record of your expenses. That way, you will be able to track them in a better manner.

Some essentials items include things such as housing, food, and essential utilities, EMIs, bills, etc. while the not-so-essentials can have nights outs, movies, or even Netflix service. Towards the end of the month, you will get a clear picture of what exactly is amiss.

Curb Your Expenses

Curb your expenses

An essential step in achieving financial independence is knowing how to limit your costs. Even a small leak in your monthly savings can be dangerous in this situation.
Financial emergencies mean that you probably do not have any extras to spend on little luxuries. A low cut-back for some time will set your finances straight in the longer run. Therefore, once you recognise the extra expenditure, strictly cut down on it. Set a strict budget for yourself and the family.

Consider The Options You Have

To avoid financial emergencies, it is important to ensure that you do not go into a lot of debt. If you have a lot of bill payments due, you can opt for options like loans, money lenders, borrowing from family, or friends {only if you’ve scraped all your savings}. But make sure that these options are tapped only and only to pay off bills, taxes, or EMIs. Paying off borrowed money should be first on your list when you have saved enough.

Have A Word With Your Boss

Finding ways to increase your income should be on top of your mind at all times. The first option to consider can be having a word with your seniors at work about a possible raise. Before you talk to them, make sure you have definite points to discuss. Be articulate and confident and not pushy or desperate. If your request isn’t granted, do not lose hope. You may be able to have another discussion after a few days. Or look for other options.

Spend Extra Hours And Energy

Overcome financial emegencies

Thanks to technology and the Internet, one doesn’t have to be confined to one’s seat for work anymore. When in an emergency, you can check online job portals. You will be amazed at the number of work-from-home opportunities and freelance projects that are available one. This is a great option not only to make more money but also to build a good work portfolio.

Work On Starting A Fund For Emergencies

Having a contingency fund helps you pay for unexpected expenses that may emerge out of the blue – medical bills, house repairs, a temporary break from your job, etc. Once you have even a little money to spare, start saving, is the first tip. Ideally, experts suggest you must aim at keeping at least three months’ worth of income. However, the amount in your emergency fund depends on your personal needs. By cutting down on your not-so-essential expenses, you may reach your saving goals faster than you’d expect.

Tip – digibank lets you open Fixed Deposits right from their app – not only is it super easy, but it also enables you to withdraw money in a simple manner in case of any emergency. We highly recommend you start one, as it will ensure that you have liquid cash whenever you are faced with any emergency. Find out more here.

Use Credit Cards Cautiously

Use Credit Cards Cautiously

Though not a highly recommended option, this can be tapped only when in dire straits. This means that required payments, like EMIs, utility bills, medical emergencies, etc. can be handled with your credit card. However, always make sure you that you clear your credit card dues as soon as possible. Word of caution: It is easy to get addicted to a credit card, so always use it with maximum restraints.

Stay Positive

During financial emergencies, the last thing you want to do is to panic. Many people get upset or discouraged when unexpected financial emergencies occur, but such a reaction will only stress you out and make matters worse. It is important that you remain calm, cool, and collected so that you have the right mind frame necessary to assess the situation and come up with the best solution to rectifying it.

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