How to survive a cash emergency and save for another one!

Everyone has those days where it doesn’t just rain it pours and if your luck is anything like mine it is always when the pennies are tight!

I will never forget the weeks following our car accident when I was pretty much house bound and in the full grip of a cold winter a few weeks before Christmas we had a boiler disaster. No heating, no hot water and no cash but we had to try to find almost £700 to get it repaired. Then last January in the snow our car gave up with no warning, setting us back £800 to get it back on the road.

However, what can you do about it to make sure that when you get in those moments, you know you can cope without too much stress?

The rule of thumb is that you should try to aim to keep 3 months worth of essential outgoing to one side, so mortgage/rent, food money etc. This is so if something bad happens such as you lose your job or end up needing time to get back on your feet, the money you have saved would take the pressure off you to allow you to get going again.

That’s easy to say that but how many of us can afford to put that sort of money away? So if you are looking to build a pot but don’t have many spare pennies each month where can you start?

  1. Firstly have a look at your monthly outgoing, I wrote this post recently about saving money on your household bills. If you can save yourself maybe £20 a month, rather than putting that in your monthly spare cash put this into your saving account. In a year you would have saved £240 into your emergency pot.
  2. Clear the junk for extra pounds and space! If you have bits around your house that you no longer use, why not try to sell on eBay or at a car boot, every few pounds you make could go into your emergency pot.
  3. If money is tight, why not try to put £1 or 50p in a pot every day, every penny counts and goes towards your pot.
  4. Cash back – I’ve lost count the amount of times  I’ve told people to get signed up to cash back sites. I am going to do a full post on cash back soon but trust me, you don’t want to be missing out on it!

Of course these are great ways to get saving, even if it is only a little at a time. But what do you do if you are caught out when you least expect it before you have had a chance to get some money put aside?

Firstly don’t panic. This is the worse thing you can do and wont help you resolve the problem, trust me I have been there before and it doesn’t help!

Have a look at your finances for the month, can you cut back any where? The first place I always look is our food budget, you don’t have to go without but could you do a cupboard/freezer week where you just buy fresh food and use up what you have in the cupboards? These extra pounds may be what you need to resolve your emergency.

If there is no where left to stretch from the budget, you may have to consider a short term loan just to get you past the emergency. Just make sure you borrow the minimum you need for the emergency and over the shortest time possible to ensure you pay the lowest amount of interest.

Just remember that if financially things get tough, you are not alone. Make sure you talk over things with family or friends, however if you feel you can’t talk to them maybe try the Money Advice Service, just don’t hide from it.

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