What is your worst-case scenario plan in case of a serious financial problem, such as losing your job, a medical emergency or a disaster at home? Being prepared – mentally and financially – will help you cope, should the unthinkable happen to you.
1. Lean on Insurance
Insurance is there to protect you from events that are out of your control, so don’t skimp on it. Health insurance for a medical emergency, home cover should a fire break out, car insurance if you’re in an accident, and so on. Make a list of what concerns you the most and see where you can protect yourself and your family.
2. Build up an Emergency Fund
An emergency fund should be your number one saving priority. Experts recommend saving at least three months of living expenses in an emergency fund. We know this can be hard when you’re struggling to make ends meet, but any money you can keep aside will be a great relief if disaster strikes.
3. Create a Budget
If you haven’t done a budget for a while, now’s the time to start. Write down every single thing you spend money on, get your family and partner involved, and take a close look at where you can save. Cut extras from your budget, like takeaways and satellite TV, and make saving a mindset.
4. Have a Plan B
It’s a good idea to create a ‘what-if’ back-up plan so that if something happens, and you don’t have an emergency fund yet, you’ve already figured out how you’ll survive. This could include taking on a weekend job, doing without a car, cutting down on kids’ activities or giving up certain services.
5. Use an Emergency Loan
No-one likes to ask for money, but you may have to ask family or friends to help you through a rough patch. If you’re considering borrowing, an emergency loan can help take care of expenses while you get back on your feet. And remember to keep track of your credit rating, as a good credit rating increases the likelihood of your loan application being approved.