Unexpected expenses are a fact of life. It is certain that there will be times when you need money and so you need to dip into your emergency fund. Creating a budget is a great way to keep your spending low and your emergency fund robust. But in some cases, budgeting will not save you from a financial emergency that you were not expecting. There are many unexpected occurrences that can cause you to need money fast.
- Medical Emergencies
- Car Expenses
- Unexpected Travel
- House Repairs
- Job Loss
When these types of expenses rear their head, your previous work creating a budget and building up an emergency fund might not be able to save you. So, what are you supposed to do when you need money fast for an unexpected expense? Read the article below to learn some tips on how to handle unexpected expenses.
Build an Emergency Fund
First things first: if you don’t have an emergency fund, start building one now. Ideally, if your emergency fund is well stocked, you will not have to use other methods when you need money for an unexpected expense.
When people work on creating a budget, they rightfully focus on paying rent, utilities, groceries, car payments, and other pressing bills. However, when creating a budget, you should also earmark a certain amount to create an emergency fund.
Creating a budget, especially when you include an emergency fund, can be difficult to stick to. However, it will save you in the long run. It is recommended that when you are creating a budget, you should aim to make your emergency fund equal to 6 months worth of expenses.
Of course, it is always better to have more money saved in an emergency fund than is needed. But if you don’t think it is feasible to accumulate the equivalent of 6 months in expenses, it is ok to start small. Save as much as you can in your emergency fund – any little bit will help you when you need money for an unexpected expense.
If you need money to pay for an unexpected expense and you do not have an emergency fund, or have already used your emergency fund, using a credit card is a good first option.
It is important not to go into credit card debt. When you are creating a budget, you should only spend the amount of money that you are earning. However, when an unexpected expense hits and you need money, it can be hard to stay out of debt.
If you need to use credit to cover an unexpected expense, there are a variety of lower interest rate credit cards that will help you when you need money and make sure you don’t go too far into debt.
When your emergency fund is depleted and you need money, an option to consider is crowdfunding. Crowdfunding is a rapidly growing business model and an increasingly popular option to find assistance for those in unfortunate financial circumstances.
Crowdfunding rose in popularity through the Kickstarter platform which aims at funding interesting business ideas. However, platforms such as GoFundMe and YouCaring have helped thousands of individuals take care of their personal expenses.
It can feel uncomfortable to ask friends, family members, and even strangers to assist you in your time of need. With that being said, a successful crowdfunding campaign can mean avoiding debt in times of financial hardship.
Crowdfunding is certainly a viable option to explore when you face an unexpected expense, but there is no guarantee that you will raise enough money or any money for that matter, so make sure to keep your expectations relatively low.
If you own a car you can leverage its value to help you cope with unexpected financial emergencies. In general, cars are a valuable asset so it makes sense to use the value of your car when you need money fast.
The most common and effective way to do this is to take out a title loan. To get a title loan, all you need is your car, a photo ID, and proof of ownership. Within minutes you can get approved for a loan based on the make, model, and condition of the vehicle.
Some lenders require you to go into their location to finalize funding like LoanMart Title Loans in Garden Grove, while others allow for everything to be completed online.
Title loans offer a quick and easy option to get quick cash in the midst of a financial emergency, but there are risks involved. The loan’s interest rates can vary quite a bit, so be sure to compare various lenders and their rates.
Final Thoughts: Have a Plan
Unfortunately, unexpected expenses will happen at least once in your life. Hopefully, it is a relatively minor expense that you can handle with ease. However, when it comes to money, the old adage holds true: prepare for the worst, hope for the best.
If you work on creating a budget and building up a large emergency fund, unexpected expenses do not have to cause you any stress.