Preparing for financial emergencies

Preparing for financial emergencies

The best time to plant a tree was 20 years ago. The second best time is now.
– Chinese Proverb

Few of us think about what would happen if we lost our jobs or suddenly became too ill to work. The thought is simply too terrible to contemplate in many cases, especially if you are living month to month on your wages as it is.

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Though with the increasing amount of redundancies out there, now is the time to start preparing for the worst case scenario.

The fact is that financial emergencies happen to almost everyone at some point and they can have devastating impact on your finances. In fact, most people who get into trouble financially do so because of a huge personal disaster such as sudden unemployment, huge medical bills, a court case, or divorce. Despite this, few people plan for these problems, even though they can happen to anyone.

Make an emergency list

If you want to keep your finances in good trim, you should know exactly what you would do in case of an emergency. Developing an actual plan can help you by letting you take action as soon as an emergency occurs. Some items that could be on your financial emergency plan could include:

1) A list of all assets you could liquidate if you had to.

2) A list of all extras or luxuries you could cut out of your life right away if there was a problem (i.e. newspaper subscriptions, satellite television,  Friday nights at the pub!).

3) A list of any resources you have that could help you in case of an emergency. Maybe you know a solicitor who helps you deal with your financial matters. Maybe you have insurance that could help you.  Keeping a list of these resources will make them easier to access in case of an emergency.

4) Other ways you could get money if you had to – jobs you could take, things you could sell on ebay.

Get loan payment protection, insurance on your credit cards, or other services NOW

Talk to your bank and lenders about services they offer to keep you safe. Payment protection, for example, is a basic service that often costs a little extra but which protects you in case you cannot make a payment on your loan.

Some credit cards and other services offer a similar protection which will help you in case you lose your job and are unable to pay for a few months.

Put away a financial cushion NOW if you can

If you save a little of any surplus now, you will have it when you have no surplus.

This can be a huge source of consolation. Even €10 a week is €500+ in a year. Imagine having that in the Post Office when the fertiliser hits the air conditioning and no other cash is available.

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