Budgeting has never been my strong point, I'll admit. And I wasn't really shocked to learn that it's something a lot of people struggle with, though I think it's safe to say you always need a little money pot. Whether that's £50, £500 or £5000, whatever works for you and your family, it's important to have something in place for when things go wrong. Just this month we've had to replace tyres on Johns car and whilst it's not exactly a huge expense it's still unexpected and not something you usually take into account when planning monthly finances, so it's important to budget so that these occurrences can be taken care of easily.
If you lay awake at night worrying about an unexpected bill landing on your doorstep, you’re not alone. A recent study found that the majority of people can’t come up with £1,000 to pay for an emergency bill, including lots of families who earn over £100,000 a year. This shows that financial problems are a serious cause of stress for most families, but it doesn't necessarily have to be this way. There are lots of ways for your family to save money, and there are also a few things you can do to help pay for big expenses. Here are three tips to help you with your family's finances.
Plan For Certain Emergencies
It can be useful to plan for certain emergencies that are more likely than others. For instance, if your car is fairly old and more likely to break down, it could be worth starting to put money aside for this eventuality now (and you may also want to invest in an Emergency Winter Kit to prevent a big cost from happening). While it is impossible to predict every single emergency, it is fairly easy to work out which emergencies are more likely to happen than others. This will make it much easier for you to handle the expenses when they do come around.
Set Up An Emergency Account
You should also set up a separate account for emergencies. This emergency fund should be kept separate from your savings fund, as this will reduce the chance of your draining your savings account to pay for an unexpected expense. It also means that you won’t use your emergency fund to pay for a holiday or another unnecessary expense!
Consider Getting Help
If you have a few thousand dollars saved up, this point doesn’t apply to you, but 37% of Americans don’t have enough savings to pay for a £500 emergency. If you don’t have £500 for emergencies you may want to consider using a low interest credit card to help with your debt. Another good option is to use a robo-advisor from a reputable company such as Betterment, Personal Capital or Future Advisor to give you savings advice. If you decide to do this, make sure you choose a robo-advisor that is suited to your finances; Betterment are known for offering stock portfolios to people with savings, whereas Future Advisor review customers to establish saving and investment goals that will benefit them more specifically during their retirement.
No one likes the idea of paying to pay for an emergency expense, but it is important to be prepared for all outcomes. This way you don’t have to worry about one big expense affecting your family finances.
*This is a paid guest post.
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