We’ve all been hit with a family financial crisis before, whether this is a car breakdown, job loss, illness, or in most recent events, a pandemic. A family financial crisis could happen at any time but being prepared will ensure that the next time this happens, it is more of a minor setback rather than a full-blown emergency.
This article is here to give you advice and support on dealing with a family financial crisis, with 4 ways to prepare for the future. If you are here because you are currently going through a financial crisis, we also explain what to do in an emergency.
What To Do In An Emergency Financial Situation
No matter how much we prepare and plan, there is bound to be a time when we are caught off guard by an emergency financial situation. Often, this is something that cannot wait, such as the car requiring a new engine or the boiler breaking in the middle of winter. It happens to the best of us. Knowing how to deal with an emergency can take some of the stress away, so you can handle the situation and relax.
One of the easiest ways to deal with an emergency financial situation is with a small loan. If you don’t have the money now but need the problem fixed before payday, you can get a loan and then pay the money back as soon as you get paid. This will reduce the term of the agreement and make sure you pay minimal interest.
When you have bad credit, it can be harder to get a loan, and this can leave many people in emergency financial situations with no way out. There are experts out there that offer a range of bad credit flexible online loans with a 15-minute pay-out, which is great for an emergency. By filling out a form with an accredited broker such as Sunny, you will be able to get an instant quote with no fees, with only a soft search on your credit profile. If you’re asking yourself the question ‘Why Can’t I Get A Loan?‘, then you will benefit from speaking to financial broker specialists, who deal with this daily.
1. Make A Family Budget
Preparing for any financial crisis means creating a budget. You may have heard this time and time again, but until you do it, it’s hard to see the benefits. When you are unaware of everything that is coming out and going into your bank each month, it is much harder to set money aside for emergencies.
A family budget is a fantastic way to see where you could be saving money and where you are spending money unnecessarily. If you are the kind of person who makes small purchases here and there, you can soon see how this adds up. A budget will assist you in being more sensible with your money and being more self-aware of your spending. It can’t change your money spending behaviour, but it can open your eyes to your spending habits.
2. Cut Down On Spending
Cutting down on spending does not mean you cannot have a social life. There is a happy medium to be found when you look through your budget and see what you can do without. There are some things the family may be paying for, like a monthly TV subscription, that barely gets used. If that’s the case, it may be time to cut it.
Cutting down on unnecessary bills will leave more room to play with when it comes to your finances. Perhaps swap out some branded foods for their cheaper alternatives. Most of the time, unbranded alternatives contain the same ingredients, and the kids will have no idea. If the family has separate mobile phone contracts, look at a family bundle that could save you money each month. You can also get family monthly subscriptions to music services such as Spotify, rather than everyone having their own accounts.
Shop around for lower rates on all your bills, you could be shocked by just how much you can save. From car insurance to energy bills, the more you can cut down on spending, the more you can put away for emergencies. Once you hit your target, you can use the same idea to save for other exciting things, like a family holiday.
3. Pay Off Your Debts
Emergencies can sometimes leave us in debt. If this isn’t paid off quickly, it can soon accumulate until you have a loan and 2 credit cards to pay off before you know it. While sometimes these are unavoidable, paying them off quickly will free up your money and leave you in a better financial position when a family financial crisis hits.
Credit cards are one of the biggest culprits, especially if they have high-interest rates. These should be paid off as soon as possible, and the first two steps can also be applied to paying off debts and saving for an emergency. Although emergencies happen, it is much better to get your debts paid off before creating an emergency fund. Paying only the minimum amount each time won’t do much to help, as interest rates can just bring this number back up again.
Try to make more than the minimum payment every month or look for a better credit card deal. Sometimes banks will offer you a credit card balance transfer, which can give you a little more wiggle room for paying off your debts. If you are going to do this, make sure you have the budget ready to pay off the card whilst it is still in the introductory period, otherwise you may just be back where you started.
4. Look For Ways To Earn More Money As A Family
Family financial emergencies hinder everyone, so look for ways you can all bring a little income into the house. If your children are old enough, this is the perfect time to teach them about money and its value. Once your kids reach working age, encourage them to get a part-time job and start paying towards the rent or food bills. This doesn’t have to be a huge amount, but even £100 each month can help you save for emergencies and teach them valuable budgeting skills for the future.
Look around the house and sell things you no longer need, whether this is the kid’s old toys and clothes, or furniture and other odd bits that you just don’t use. You’d be surprised how much stuff can accumulate in the family home over the years, so if you’ve been dying to clean out the house and the attic, now is a good time to do so. Post the items to online marketplaces or visit a car boot sale and follow these car boot sale hacks. Put any earnings straight into your family emergency savings account.
Dealing with a family financial crisis can be made easier by following these 4 tips. Preparation is key when it comes to finances, and having enough saved for an emergency will ease stress and allow you to get things sorted quickly. If you do need a helping hand, a short-term loan that you pay back on payday is a handy interim solution.
