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By its nature, the unexpected always comes as a surprise, and if that unexpected event is a financial one, it can often be more of a shock. Yet, unexpected expenses crop up for all of us from time to time, and while this can be stressful, the good news is that there are ways to deal with these expenses by planning ahead for these unforeseen episodes.
There are many types of unforeseen expenses, and while some may be pretty mundane, others may be a significant emergency.
Regardless of the nature of the crisis, it isn't always easy to cope with making an unplanned payment or understanding how to deal with unexpected expenses, especially if it's a costly one.
In the event of an emergency, having an effective plan in place will help give you greater security and a peace of mind for your household.
Before we give you some advice about dealing with unexpected expenses effectively, it might be helpful to know which type of unexpected expense is most common.
There are several reasons why you may need to suddenly find some extra money at short notice, but here are 10 of the most frequently seen financial emergencies that you're likely to encounter.
Almost everyone has experienced a sudden car breakdown at some point in their lives - you're out on a family day trip or heading back from work, and suddenly your vehicle grinds to a halt.
This isn't just inconvenient; it can also lead to unexpected expenses. Broken down vehicles incur costs because you may need to pay to arrange for services to tow them away and high cost repairs. For many people today, a car is a lifeline, so getting it fixed will be essential.
If your heating system fails during the winter, you're going to need to get it repaired as soon as possible. Otherwise, you'll be freezing and will have no access to hot water. A repair can often be costly, and the price of replacing the system can be even greater.
Usually, we can plan for our bills, but sometimes we can be hit with an incredibly high bill for a reason beyond our control.
Perhaps you've moved to a new property and didn't know how much you'd need to pay to heat it during the winter.
Or maybe your insurance plan premiums have suddenly increased after making a claim. Having to find extra funds to cover these unexpectedly high bills can prove challenging.
While the NHS often covers our medical expenses in the UK, sometimes an emergency will require you to pay for access to health care. For example, even with an NHS dentist, you will often need to pay for some of your treatment, and if you require a complex procedure, this can be expensive. For more information, check our article on dental financing.
Sometimes it can be all-too-easy to accidentally become overdrawn on your current account, especially around the Christmas season.
Finding sufficient funds to cover your usual household expenses along with the additional payment so that you can get back on track financially is often difficult.
Losing a loved one is hard , but it’s even harder if you incur the cost of the funeral too.
Funerals can cost as much as £4000 and additional charges for flowers, catering, and memorials.
Although funeral plans can help cover these costs, advance planning isn't always possible, leaving family members frequently poorly prepared to pay the bill.
Credit card expenditure can often be hard to manage. Although having credit cards is useful in helping you to build up a positive credit record and manage your debts correctly, it may be hard to pay back the amount you borrow on time, especially if you've overspent on your account.
From time to time in everyone's life, a family member will find themselves in a difficult situation and need financial help.
Perhaps they have recently lost their job, perhaps they've experienced a personal problem that has led to debt, or perhaps they only need to borrow a little extra money to tide them over through a challenging period and will pay you back in the future.
Any of these eventualities can leave you with an unexpected expense on your hands.
From broken doors to damaged windows and leaking plumbing to a small domestic fire, when an emergency repair is necessary for your home, it can be hard to find enough money to cover the costs.
Often, fixing these problems is time-sensitive, stressful and costly.
When you have to handle unexpected expenses like any of the above, it's important to know where you can turn to for money.
Fortunately, we have some excellent tips that could help you be better prepared in any or all of these circumstances.
Before we start looking at how to deal with unexpected expenses, the first step is to determine whether or not you're responsible for paying to resolve the issue.
If you rent your home, your landlord could be responsible for finding the money for rectifications.
Avoiding or reducing the amount you may need to pay is also possible by having insurance.
Although not all situations are covered by your monthly premiums, it's always worthwhile checking whether your policy covers all or some of the amount.
Although this idea won't help you if you're in an urgent situation right now, setting up an emergency fund is a good plan for the future.
If you set aside some savings every month, this will help when events like these happen.
It's often recommended that you have enough cash in your emergency fund savings accounts to last you for at least three months just in case you fall on difficult times.
If you've been putting money aside in a savings account to fund a holiday or new vehicle, skipping that planned expense is often the best advice.
An unforeseen financial emergency could be far more important than your future plans, and dipping into those savings and changing your priorities could help you get through this difficult time in your life, even if it means missing out on something exciting.
Finding a way to generate a little more personal income can boost your budget in tough times.
Most people have unwanted items in their homes that they can put up for sale to add more much-needed cash to their accounts.
If you have money in an underperforming investment fund, an urgent situation could be the perfect time to cash it in.
Although sometimes waiting for investments to turn around can be a good strategy, this isn't always the case. Rather than dipping into your savings, if you have them, you may want to drop those poorer-performing investments instead.
Not all reasons for emergency spending can be prepared for in advance, but there are some options for those that can be.
Insurance services have been devised specifically for this purpose to give you the extra financial security and peace of mind you need if you're suddenly coping with a crisis, so it's in your best interest to consider taking out policies.
Taking out pet insurance, for example, could save you a huge amount of money rather than paying out of pocket if your pet becomes unwell.
Home insurance will, again, bring enormous savings to your personal finances if you become the victim of theft or suffer from a fire. Fully comprehensive car insurance will save you from an enormous bill if you're in an accident that is your fault.
The monthly premiums can be accounted for in your budget and prevent you from having to dip into your savings (if you have any) if something happens.
Not everybody is lucky enough to have a support system of friends and family around them.
However, if you are in this fortunate position, it makes sense to call your loved ones and ask for some support to tide you over through a difficult time.
Often, a number of people will offer help for free, but even if they can't, they may be prepared to offer you a loan that you can pay back interest-free at a later date.
Although it's never a nice feeling to be in debt to friends or family, remember that you'd often jump in to save their skin, too, if the situation was reversed, and you can make sure you make it up to them when you're in a better financial position.
A common way to handle an unforeseen expense is to put it on a credit card. This isn't the best option because it will incur interest unless you can pay off the debt straight away. However, it could be the only way of saving the day in an emergency.
A payday loan is a way to survive the rough time you're going through, especially if you don't have credit cards or loved ones who can lend you the money you need.
However, payday loans should always be considered only as a temporary, short term solution. Since they're easier and quicker to obtain than a personal loan from your bank, they could be an option if you need money urgently and all other options have been exhausted.
Payday loans are rarely a good idea due to the risk of becoming trapped in a cycle of spiralling debt as the interest is so high.
With such a short period of time within which to pay off the full amount of the loan, it can often be difficult to find sufficient funds to cover the costs. Even if enough money can be sourced, it often leaves too little remaining to pay for all of the essentials next month. Therefore, taking out yet another payday loan to cover those expenses becomes necessary. This very quickly can become an ongoing pattern which is difficult to break.
If you default on a payday loan, your credit score will take a major hit. This, in turn, will make it harder in the long run to get credit in the future and leave you even more dependent on payday lending.
If you do your research well, you'll find that a no-interest loan is a great choice if you're facing unexpected expenses.
With no interest payable, as long as you make your repayments on time, you can keep control over your finances even if you encounter a last-minute problem.
By signing up for membership of an organisation offering these loans, you can save yourself stress and panic. Becoming a member of Creditspring allows you to benefit from a no interest loan. Offering you the opportunity to take out two no-interest loans per year, Creditspring ensures that you’ll never need to rely on payday lending again in an emergency.
With these ten potential solutions in mind, you'll be in a good position to handle a financial crisis the next time one arises.
