No matter how thrifty we are, unexpected expenses can happen to any of us. Perhaps the boiler has broken down, or the car needs an expensive repair, or a grandchild needs some financial help that you want to give. Here are some ways we can tackle an unexpected bill or other expenses.
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Use An Emergency Fund
An emergency fund aims to help us with unexpected expenses. Dipping into the money we have set aside can help us to meet unexpected costs, whatever they might be.
A general rule of thumb is to try and save the equivalent of three month’s expenses in the emergency fund. This should be enough for most of us to cover the most common expense emergencies. If we dip into these savings, however, we should top them up again afterwards.
It can help to set aside the money in different accounts for specific problems, like house maintenance, or car repairs. If we split our savings like this, we’re less likely to be tempted to raid our savings for something else, as we’re holding each fund for something specific. We’re less likely to raid the fund for medical bills for a treat for ourselves than we would a more generic savings account. If you don’t have an emergency fund, you could consider payday loans for one-off expenses.
Take Interest-Free Credit
Depending on what the unexpected bill is, it can be covered using interest-free credit. For example, if the car can’t be repaired and I need to buy a new one, a car dealer might be able to offer me 0% finance to help me do this.
Interest-free credit can also be helpful for things like needing to replace the sofa or a carpet or needing to buy a new boiler. Most of these things can be bought with 0% finance.
However, we must remember to be careful with credit and only borrow what we can afford to repay.
Borrow From Family
Lots of us have borrowed money from friends and family, and this can be an option if we’re really stuck. Borrowing from our loved ones can be a cheaper option than other kinds of loan, as most relatives won’t charge us interest on what you borrow. If I borrow from a friend, I might also be able to arrange a looser payment schedule to replay them, rather than worrying about meeting a set repayment schedule every month.
Borrowing from people we love can have consequences, however, so it’s important to think carefully about doing this. Owing someone money can create resentment and make things awkward between you.
If I choose to borrow money from a friend or a family member, I can reduce the risk of causing problems by getting an agreement in writing.
This prevents any disagreement later about how much money was borrowed and gets a repayment schedule in place that suits everyone and prevents rows. Protect your friendships by doing this too before you ask someone to lend you money.
