Life is an unpredictable rollercoaster of challenges – or, at least, it very much feels that way when you’re a parent. There are already the holistic challenges of living through a cost-of-living crisis, but these challenges are doubled when you have little ones to look after. There’s always some unexpected cost around the corner, and sometimes the size of that unexpected cost can threaten to completely eviscerate your family budget.
Difficult as such financial quandaries can be to navigate, they are not impossible to manage. With the right practical frameworks, you can handle sudden financial shortfalls without having to lose sight of your day-to-day household costs in the process. Here, we’ll take the opportunity to look at some key tips and techniques for managing your money in the face of an emergency expense.
1. Assess The Situation
First, you need to get a handle on the specifics of your financial emergency. “The boiler broke” is not a thorough reading of the situation or what money it may require. The nature of your response could change dramatically if all you need is a boiler repair call-out, as opposed to a completely new central heating system.
In the same breath, this is a good opportunity to review what your current financial situation is – including a refresh of what your essential monthly outgoings are. Are there any costs that can temporarily be reduced or postponed? Which bills are non-negotiable? And ultimately, how much do you need to put aside to cover those non-negotiables before handling your financial emergency?
2. Check What Help Is Available Before Borrowing
One of the key ways in which the unaffordable becomes affordable is borrowing – but borrowing can be a high-risk endeavour, particularly where someone hasn’t ensured that repayments fall within their month-to-month affordability. Borrowing, then, should be a last resort, that you turn to after exhausting other means of covering any shortfall.
You may be able to borrow money from family or friends, for instance. If this isn’t possible, other pathways are available; for example, if you are on Universal Credit, you may qualify for a Budgeting Advance to cover your short-term shortfall.
3. Compare Ways Of Covering An Unavoidable Shortfall
Where other means of finding emergency funds are unavailable, borrowing may be the most prudent move. Still, it shouldn’t be something you enter into blindly. Same day loans can be incredibly useful for accessing money in the short term, but also come with high interest rates; make sure your long-term affordability makes room for such repayments before committing.
4. Rebuild The Budget
After covering your emergency cost, your financial situation will have changed. As such, you’ll want to readjust your household budget to account for any new repayments, and to gradually restore any money you may have used from savings. You might also take the opportunity to save future you from similar challenges, by building an emergency fund.
