Nobody knows when a financial emergency will strike. We’ve all learned that lesson when COVID-19 hit a little over two years ago, closing down businesses and leaving millions unemployed.
Alongside the call for government support, the crisis emphasized the need for proper financial management on the personal level. Having no stable finances in a crisis could cause material and emotional difficulties.
Emergency-proofing becomes a necessity for future survival, especially surrounding one’s finances. Below are a few ways you could implement to improve your current financial situation and secure yourself financially in the future:
Build an Emergency Fund
An emergency fund is where you set aside money for large, unforeseen expenses. This fund comes in handy in times of financial distress, such as unexpected or severe sickness, losing a job, home repairs, or appliance replacements.
How much should you save for your emergency fund? It largely depends on your lifestyle and location and your capability to come up with a certain amount.
However, remember to set aside at least three to six months’ worth of expenses. This would provide you with a comfortable buffer until you find a more stable solution.
Explore Fast Cash Options
In some cases, your emergency fund might not be enough. If you’ve run out of money and still need funding, exploring ways to get fast cash might be worthwhile.
One way to get money fast is by selling some of your belongings. Used clothes, books, games, electronics, and furniture could fetch you some cash if you sell enough. You could set up a yard sale or create listings on online marketplaces.
You could also pick up extra shifts, set up a side hustle, or get another job if you have enough time. An additional income stream could ease some of your financial burdens.
Another quick source of cash is a loan. Many companies now offer hassle-free loan applications so you can borrow money fast online. Simply read and review the terms and conditions thoroughly and pay on time to avoid additional fees.
Get Insurance Coverage
Your insurance coverage would come in handy during emergencies. Life insurance, car insurance, health insurance, and other policies could cover several emergencies you might encounter.
Before disaster strikes, make sure to review your insurance policies and make adjustments if necessary, especially in areas where you might be lacking.
Look into possible discounts, as well. Many insurance providers offer discounts for insurance bundles, helping you save on your premiums.
Manage Your Debt
The ideal scenario for emergency-proofing your finances is paying off all your debt. Without this expense looming over your head, you could focus more on your immediate needs.
However, many people will incur some debt in their lifetime. Debt isn’t necessarily bad, as long as you manage it well. It’s advisable to pay off your debt on time and as soon as possible to avoid late payment penalties and high-interest payments.
If you can’t pay your obligations on time due to an emergency, you may want to ask for a debt settlement or look into debt relief programs.
Facing Financial Emergencies
Emergencies are never easy to deal with, especially when it involves your finances. A lot of trouble could stem from a lack of funds or mismanaged funds.
Make the necessary preparations to protect yourself should you face a financial crisis. Prepping might not solve all of your problems, but it will help cushion the blow and help you recover.