We all know how unexpected life can be, so having a backup plan for all scenarios is essential. Whether you have an emergency medical bill, urgent car repairs, or a broken boiler to pay for, knowing how to cover emergency expenses is vital.
In this blog post, the loan specialists at QuidMarket will suggest some of the best options for handling emergencies without burning through your budget.
1. Build An Emergency Fund:
This is probably one of the best tools for handling an emergency expense as you will be using your own personal savings.
This fund should be reserved solely for emergency situations and you should aim to add cash into the account each month. Withdrawing from your dedicated emergency fund will not impact your ability to pay for your rent or mortgage, utilities, groceries, or other essentials.
However, the only issue that comes with the backup plan is that it could take time to build a substantial safety net.
2. Use A Credit Card:
If you have been unable to build an emergency fund, you could use a credit card as a backup plan. By using a card, you could have the freedom to handle expenses in various sizes, then manage the repayments later on.
You can also save a little bit of money on interest by choosing a credit card that offers a 0% interest period. Before turning to this option, you should make sure that your outstanding balance is far enough away from your pre-approved limit to avoid maxing out your card.
3. Apply For A Short Term Loan:
A short-term loan could cover your expenses and allow you to repay within a few months to suit your budget. There are a variety of short-term loans available, so it’s essential to do your research and find a solution that works for you.
It’s also imperative that you check your own affordability before applying. Take your monthly income, regular outgoings, and financial commitments into consideration to decide whether you will be able to comfortably make repayments each month.
4. Use A Line Of Credit:
Another credit tool that could be useful for emergencies is a line of credit. With this type of product, you and the lender agree on a credit limit, and you can make withdrawals within this limit.
You will only need to repay the amounts you withdraw, so this could be an ideal solution for emergency expenses. Many lenders also allow you to have a line of credit for a number of years, so they could help to cover you for an extended period of time.
5. Try Personal Borrowing:
This should ideally be your last option when it comes to making backup plans. Your friends or family can’t be expected to have the funds you need on-hand, especially if you need a large amount for your emergency expense.
Plus, this option can also put a strain on your relationships, particularly if you can’t reply straight away. However, it can be an interest-free solution if you have no other choice.
It’s always sensible to be prepared for any scenario, so with the best financial backup plans in place, you can confidently face any emergency expenses.