When you’re living a cash-conscious life, unexpected big purchases can be challenging to deal with. You might have to make an emergency car repair, replace your broken laptop, or pay for a new boiler. Having money set aside in case of emergencies can help alleviate some stress and give you peace of mind knowing that you won’t have to take out a loan or get another source of funding for this purchase. If you don’t have an emergency fund or savings account available, these tips can help ease the burden when your wallet takes a hit from unexpected expenses. Keep reading to learn more.
Assess Your Financial Situation
Before you make any big purchases, take a moment to assess your financial situation. Make a list of your monthly bills or recurring costs, such as rent or car payments, and create a budget. This will help you determine how much you can afford to spend on your unexpected expenses, how long you’ll need to save for them, and what you can do to speed up the process.
Check Your Credit Score
If you’re considering taking out a loan, like a credit card, mortgage, or car loan, you’ll need to make sure your credit score is high. This will help make the process of getting approved for a loan easier. Find out your credit score for free at ClearScore, Experian, or Equifax. If your score is low, you can take steps to improve it, which include keeping your credit card balances low, paying your bills on time, and paying down your debt.
Consider A Short Term Loan
If you need a large amount of money quickly, like if your car breaks down, you may be able to take out a short term loan. Short term loans, like payday loans, are a good way to get money quickly to pay for unexpected costs without having to go through long approval wait times. If you’re looking to learn more about short term loans and whether they’re a good fit for your situation, head over to Sunny for expert advice to help you make a decision.
Borrow From Friends Or Family
If you’re close to someone, you may be able to ask them to lend you money. The easiest way to do this is to talk to the person you need to borrow from and ask them directly. If you’re nervous or uncomfortable asking, try to come up with a reasonable repayment plan and an explanation of why you need the money. Be honest with them about your financial situation and the amount and terms you’d like to borrow.
Create A Repayment Budget
Whether you need to take out a short term loan or a loan from a friend or family member, it’s important to create a repayment plan. This will help you understand how much you can afford and what impact your repayments will have on your finances. Figure out how much you need to pay back each month and create a budget with the money you’ve borrowed. Add this monthly payment to your budget so you don’t lose track of it, and it’s included in your financial planning.
Sell Items You Don’t Need
If you have items, you no longer use or need, try selling them online. You may be able to get a decent amount of money for items you don’t use anymore, such as old books, blu rays, or a piece of furniture you don’t need. You can also sell items you don’t use, like clothes you don’t wear or electronics. Selling items can be a quick way to earn a little bit of extra money and should be easier than taking out a loan.
Research The Product Or Service You Want
Before you make a big purchase, research the product or service you want to buy. Look for coupons, deals, and sales that can help you save money. Make sure you are getting a good deal and that the price you’re paying is worth it. You may also be able to find financing options that will allow you to pay for the item over time. This can help you spread out the cost of a big purchase and make it more manageable. You may also want to consider whether you’d be better off renting a product instead of buying it.
Take the time to compare prices between different stores. Even if you’re in a rush, you can usually find the item you need on sale or with a coupon in one store and then get in and out quickly. Make a list of the items you need and compare prices between different stores to see where you can save money. You can also search online for sales. If you know what you need and you know that you have a very specific item in mind, then it makes sense to shop around to get the best price. Staying one step ahead of the game, you can save not just time but also money.
Know Where To Look For Deals
If you’re saving for an unexpected big purchase, you can look for deals and coupons that help you save money. Coupon websites and apps, like Honey, let you search for coupons by product, brand, category, and more. You can also sign up for rewards programs at your favourite retailers to earn points or other benefits. You can use these points to get discounts on your next purchase. You can also use cash-back apps to earn money back on your everyday purchases.
How To Save For Unexpected Big Purchases In The Future
If you’ve been able to come up with a solution to pay for the unexpected expense, you might want to consider setting up an ongoing budget that allows you to develop your savings and credit score. If you’re not sure how to start, a financial advisor can help you get started. You can hire a financial advisor or check out free online advice set up by experts.
Building An Emergency Fund
If you don’t have an emergency fund, now is the time to start saving. As well as having a standard savings account, it’s important to also have one set up for emergencies. This will help you cover unexpected costs in future without having to drain your savings accounts. You can have an emergency fund at any amount, depending on what you think could come up in the future. From £100 to £1000, having a fund specifically for emergencies can give you peace of mind when the unexpected happens.
Saving money is important. But sometimes saving money isn’t enough to pay for an unexpected big purchase. You may need a loan, and if you can’t get a loan from a friend or family member, you might need to take out a short-term loan from a company like Sunny.
Ensuring that you have enough money set aside for the unexpected is crucial for your financial security. While it might be tempting to splurge on a new pair of shoes when you need money, it’s actually better to save this money for other purchases. You can use these funds later to pay for things you need, or you can set up ongoing savings plan to help you build your savings and credit score over the long term.