Just when you think you’ve got everything sorted and organised, you run into a problem – and it’s probably a problem that’s going to cost you money because, most of the time, that’s what problems do. And it could be something small like an emergency repair needed around the house, or it could be something big, like an economic downturn, but whatever it is, it’s going to affect you and your money, and that’s scary when you’re not prepared. So, although you can’t always control what happens, there are some things you can do to be ready, just in case, and with that in mind, here’s how to protect your finances when things get a bit tricky; read on to find out more.
Build An Emergency Fund
An emergency fund is the very first thing you should do if you want to protect your finances in times of crisis, and even if you don’t do anything else on this list (or anything else full stop), building an emergency fund really does have to be a priority. It’s got to cover somewhere between three and six months of living expenses, but although that might sound like a scary number, it’s not as bad as you might think – you can start small and save what you can. After all, even having a few hundred pounds and having that when you need it can make a difference.
The key is to treat your emergency fund like something untouchable and sacred – it’s only for emergencies, not for little treats because as soon as you start going down that road, you’ll end up spending it on things that you don’t need, and you won’t have it when you do need it. All that hard work would have been for nothing.
Stay On Top Of Your Income
One of the most worrying things that can happen when it comes to protecting your finances is if you lose your job – that income you relied on every month is no longer there, and that’s where big problems can very quickly arise. So, if the worst does happen and you do lose your job, don’t panic because that’s going to waste time you don’t have – instead, get creative and think outside the box to bring some money in, no matter how little it might be.
Could you become a freelancer, for example (even if it’s just temporarily) thanks to the skills you’ve picked up? Or could you start a side hustle? What about selling your stuff online if you no longer need it? And don’t forget about potential compensation either – if an injury means you can’t work, looking into options like personal injury compensation might be wise because you could get some financial relief and that can take a lot of pressure off.
Know Your Expenses
When a financial crisis hits, knowing where your money actually goes each month can really make a difference – and it’s something you might not have thought about before when you have enough money to cover everything without any issues. The first step is to take some time to look into what you’re spending and think about what’s essential (rent, utilities, food, and so on) and what’s not – then you can prioritise the essentials immediately and save a lot of issues.
This is the perfect time to trim a little fat from your bank account, so while you’re going through everything, think about whether it not it’s something you need or whether it’s something you want but could do without, at least for a while (don’t forget, the idea is to get you back on your feet, so none of the changes have to be permanent, unless you realise you actually don’t need whatever it is you’re cancelling). You might be able to save a lot of money doing that, a surprising amount in most cases, and it can show you just how much money you’re ‘wasting’ on things that aren’t important.
Speak To Your Creditors
If you’re having problems with paying your bills, loans, credit cards, and so on, it can definitely be something that causes a lot of stress and sleepless nights, but there is something you can do to make it better – speak to your creditors. That might sound like the worst thing you could do and something you’d actively want to avoid, but it’s the best way to sort things out and get back on track.
The fact is that many lenders are willing to offer some kind of temporary relief, like payment holidays or reduced payments, especially if you give them a heads up early on. Remember, things happen in life and even if you never thought it would happen, sometimes it – whatever it might be – does. But being proactive and showing that you’re still responsible despite what’s happened can save you a lot of stress and financial problems, so it’s got to be done.
