A financial emergency can feel like a punch in the gut, that leaves you helpless and frustrated as you attempt to keep your head above the water. This can be particularly difficult if you don’t have an emergency fund or savings to fall back on. However, it’s not impossible to get a loan in an emergency, as many inclusive lenders now offer affordable credit options to see you through a rough patch.
Recovering from an unforeseen expense like this can seem like a distant possibility, yet it’s entirely within your reach. Consider implementing a few nifty financial measures to put yourself back on track. This includes smart budgeting techniques like a lean budget or a zero-based budget, setting up an emergency fund and seeking financial advice.
Doing this can give you direction and guide your next monetary steps and decisions, helping you make informed choices that put you on the path to financial recovery. Don’t forget to take care of yourself too, as mental stress can take a toll on your mind and body at such times.
In this article, we explore ways you can set yourself up to bounce back after a financial emergency.
Take an Honest Look at Your Financials
Sometimes, the road to recovery begins by assessing the damage and current situation. In this case, you need to honestly review your financial position and account for how you’ve been impacted on account of this emergency. Doing this is an important step as it gives you a better understanding of what needs to be done to make up for it.
Whether this is a loss of income, an urgent repair, or an overseas trip, having a clearer picture of your finances helps you map your steps carefully for the road ahead. Go through your list of expenses, bills, and outstanding debts to figure out which items need to be addressed on a priority basis.
A Survival Budget Could be the Solution
A survival budget is nothing but a budget that primarily prioritises only essential expenses. How will this help? By utilising your cash inflows only on what you need for day-to-day living, and by completely avoiding unnecessary spending. In simple words, you give first place to expenses that go towards bill payments, food, groceries, utilities, etc.
Non-essential expenses are stripped out in a survival budget. This would imply that you curtail your expenditures on dining out, entertainment, subscriptions and apps that you don’t need. Redirecting the money saved from this could go toward an emergency fund or even debt payments. Doing this, at least for a few weeks or months, can stabilise you financially in whatever capacity possible.
Choose Your Credit Options Carefully
Choosing to borrow during an emergency or after one is fairly common, as everyone could do with a little help. However, when borrowing, this is also the time to tread carefully. Unlike other credit options, most emergency credit solutions are a bandage solution that aren’t sustainable for long-term financial needs. While short-term loans are helpful, they come with comparatively high interest rates.
Ideally, in such situations, the loan you take shouldn’t further add to your stress. For this reason, it’s recommended that you consider short-term loan alternatives from direct and ethical lenders like Salad. You could also take a salary advance if that’s an option available to you. By doing this, you limit your borrowing risks considerably, making for a safer borrowing experience.
Increase your Cash Inflow
The fastest way to set yourself on a path to financial recovery is to generate an extra source of income. This can help you boost your savings and alleviate your stress. Wondering where to start? Consider taking up a gig or freelancing. No matter what field you’re in, with a little digging and effort, you can find the right opportunity that’s suitable for you.
With a majority of gig work available online, you can also do this from the comfort of your home. Creatives in particular can easily find a plethora of writing, editing, designing and tutoring opportunities to make a few quids over the weekend. You could also consider turning your hobby into a professional service. This could keep you productively engaged doing something you love.
Plan Proactively for the Future
Once you’ve experienced a financial emergency, you wouldn’t want to have another one anytime soon. To circumvent this, it’s important to take proactive financial measures that can act as a buffer in times of financial shock and keep you afloat.
You can start by exploring insurance options where needed, especially in areas that have been a constant source of financial duress for you. For example, if you’ve been plagued with home repairs, consider taking a house insurance policy to protect yourself against any major expenses that may arise in the future.
Finally, Stay Patient Through It All
Recovering from a financial emergency is no small feat, and requires as much patience as it requires planning and financial prudence. Every small step you take adds up to results down the road.
With the solutions we’ve discussed, you can take back control of your financial health and make progress in due time. With a careful combination of the options available to you, you and your finances can bounce back!
