Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
25 November 2018

Dealing With Financial Emergencies

Sometimes, we can be completely caught-off guard and find ourselves dealing with an unexpected financial emergency. This could be the result of a sudden emergency home repair to fix a broken boiler or a leak, or it could be that you or a spouse has lost your job, or even a burglary whilst not having home insurance. The list can go on and on and often when these things occur, one of the only options is exploring payday loans and other short term funding solutions.

Whatever the situation is, having an unexpected change in your financial circumstances is very stressful; how will you pay for utilities, the mortgage or rent, as well as food and other expenses? According to a recent Post Office investigation, it was revealed that the average UK family would be only able to continue with their lifestyle for up to two months, should they find themselves in a crisis.


Negotiate With Lenders

If you are seriously struggling to figure out how you will keep on top with credit cards bills or your mortgage, it is definitely worth calling lenders to explain the situation as early on as you possibly can. Be they long or short term loans online or via the high street, this can end up providing you with a lower interest rate or an extension of the terms. This can also work with utility companies, who you may also be able to negotiate bills with. Don’t leave this too late and let things spiral completely out of control.

Maintain an Emergency Fund

Ideally, in order to make dealing with a financial emergency a lot less anxiety inducing, you should try to save a little each month to put away into a savings account should you ever find yourself in a crisis. One of the best ways you can get into a good habit of saving money for emergencies is to create a standing order that comes out of your account each month. This means that you do not have to consciously remember each and every month to put money aside. You should try to see the standing order as just like any other bill you pay.

Invest in life insurance

It is often worth getting life insurance to alleviate some of the potential stress of an unexpected emergency, such as a sudden illness, death in the family, injury or a natural disaster happening, which results in financial difficulty.  This means you won’t have to worry about mounting expenses.

However, it is important to note that in many cases redundancy is not covered by life insurance policies, so it is best to research thoroughly to make sure you have chosen the right life insurance policy for you.

Asking for help

Asking for help can make a huge difference if you are struggling with finances, and there are different schemes out there that can help you depending on your situation such as:

  • Carer’s allowance: If you have had to leave work to care for someone, or you have become unwell you may qualify for this allowance
  • Statutory Sick Pay: If you have had to leave work because of illness you may qualify for this benefit, or the Employment and Support Allowance
  • Concessions: If you are disabled you may be able to receive concessions for public transport, parking and help with caring costs through your local council
  • Consider an overdraft alternative product that may provide an increased degree of flexibility compared to other short term solutions

You can also use turn2us.org.uk to find out if there are any concessions or benefits that you are entitled to in your situation of financial difficult that you are currently not receiving.

In addition, if you are one of the eight million people who are currently struggling to pay bills, perhaps as a result of an financial emergency, it is worth getting free debt advice. This can help you feel less overwhelmed by your difficulties, and they can also help you get your finances in order.

For example, you can contact your local Citizens Advice Bureau to book an appointment with a debt adviser (or you can visit their website). In addition, the Money Advice Service can help put you in the right direction for help. The Money Advice Service also has an online debt test that you can complete. This calculates within minutes your level of debt and helps to provide a plan of action so that you can get out of your financial emergency and get your payments all back on track.

There are other free, independent advice organisations you can turn to. Such as Debt.org, National Debtline, and Stepchange who can help provide support and talk through your financial worries.

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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk