What to do if you are in Financial Difficulties

Hopefully, if you have a financial emergency, you will be able to find funds from a savings account or some other pot of money you have put aside especially for such situations. However, there may be times when you are totally unprepared; for example, when you are made redundant or you or a family member is suddenly taken ill. When such an emergency happens, there are a number of ways that you can deal with it. 

Don’t panic

Your first thought may be that you just don’t know how you are going to cope. You may be worried about losing your home or not being able to pay bills and buy food for that month or those coming up. However, try and keep as calm as possible so that you can work out what you are going to do. It may be a simple matter of switching funds from another source, or perhaps you and your partner can scrape together enough money between you. Find out exactly when you need to make the payment too – you may be able to put it off until you have found the necessary funds.

Put off unnecessary purchases

You may have purchases planned for the months ahead that you can cancel or postpone. This is not the time to be going to Disney World, even if you promised the children a year ago, nor is it the time to plan for a new car or conservatory. Even cancelling smaller purchases, such as magazine subscriptions or a gym membership can be helpful. You need to redirect as much money as possible towards the emergency, so be harsh with both yourself and your family members. Do whatever it takes to avoid getting into debt.

Talk to family and friends

If you have friends and family who can support you, then it is worth approaching them. You may not want to do so, especially if they aren’t in the greatest of financial shape themselves, but they may be able to lend you just enough money to get you through the emergency. If you’re concerned about borrowing large sums of money from one person, then see if you can borrow a small amount from more than one; that way, they may not require you to pay it back as quickly, which gives you a little more breathing space while you sort yourself out.

Seek out available assistance

Find out if you are entitled to government help. In the UK, medical expenses should be covered by the NHS, unless you go private, in which case you will hopefully have insurance. However, you may be entitled to disability pay or some other form of help. If you’ve been made unemployed, look into unemployment benefit as soon as possible; it can take some time to sort out payments, so the sooner you sort things out, the better. Don’t be proud if you’re facing a financial emergency; there are many in similar circumstances, so don’t think your situation is unusual.

Consider borrowing

If at all possible, try to avoid borrowing money from lenders. Even if you have a good credit rating, you will find the interest to be high, but it may be your only option. Just ensure you think about how you are going to pay the money back. If your emergency stems from the fact that you are already in debt and are facing the loss of your property, then you will need to be prepared to negotiate with your lenders. Of course, they would rather that you paid your debts as soon as possible, but they will probably be willing to work out a payment plan with you rather than have you face bankruptcy and therefore be unable to pay back anything.

Take steps to deal with future emergencies

If you are facing a financial emergency, take steps to ensure that you are unlikely to face another one. This could mean simply starting up an emergency fund and being very strict about the amount you save each month. It could also mean a total lifestyle change, especially if you have been living above your means. Consider moving to a smaller property or even to a cheaper part of the country. Ensure that your entire family is on board with this; it is not enough for you alone to start making changes.

A financial emergency will give you a real fright, so learn from it and ensure that it does not happen again. In the meantime, do what you can to put the current emergency behind you.