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5 Ways To Avoid A Personal Financial Crisis

Unfortunately there’s no getting away from the fact that the ability to pay for bills, mortgages, rent and living costs is fundamental to the way we live. Often financial difficulties can be the cause of many people not being able to sleep at night. It’s very easy to avoid tackling financial issues and hope that problems will just go away, but this rarely happens and it’s really important to face problems head on. Even if you don’t have any issues at the moment, a little planning now will ensure that you will avoid or lessen any potential financial hardship in the future. As we don’t have a magic crystal ball we cannot predict any difficulties that we may face, such as redundancy, illness and housing issues.

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A little planning now can let you get on with living your life!

Budget

Take a careful look at how much money you have coming in and how much is going out. You need to be really aware of where you are spending your money.You will be able to address any deficits and budget accordingly. Do you spend a lot of money on eating out? Can you afford it? Are there any areas that you can cut back on spending? Ideally it would be good practice to save a percentage of your monthly wage to build up an emergency fund. This will cushion any unforeseen crisis, such as the washing machine breaking down. Once you have decided on a budget – stick to it, it’s very tempting to have the attitude that buying that 100% cashmere jumper is a must rather than a luxury!

Maximise savings

If you have savings make them work for you. Ensure you invest your savings into financial products that give you the best return. If you cannot invest your savings long term ensure that they remain liquid, this will prevent you from getting penalties from withdrawing your money in cases of emergencies. Financial products change rapidly, so stay up to date and consider hiring a professional financial advisor.

Reduce monthly bills

Can you look at cutting back on your monthly bills? Cutting back will make a huge difference to your budget. Ensure that you are on the best mobile phone tariff that works for you, if you have a mobile phone do you really need a landline?  Utility suppliers often have good deals for gas and electric, it is always worth doing a comparison search to see if there are any better deals out there. It is also worth doing a comparison search for any insurance you may have. Always read reviews though and choose a reputable insurance company like Johnson Insurance. A reputable company is really important for car insurance, as if you’re unfortunate to be in a car accident you will need excellent support and advice.

A Lot of people leave paying bills to the very last minute, unfortunately if you pay your bills late you could incur some very hefty penalty charges. Setting up direct debits to pay your monthly bills will stop this from happening.  

Credit Cards

If you have a credit card ensure that you pay the balance as quickly as possible. Most people have credit cards because it’s convenient and safe to make large purchases, as protection is included. However don’t let the balance mount up and always try to  pay more than the minimum amount each month. Most credit cards offer 0% APR for a period of time, this can be either on balance transfers or purchases. Following the interest free period the interest rate rises considerably. Keep a close eye on when the deal ends and either pay off the balance or transfer the balance to another card with an interest free deal. Managing credit cards can turn into a juggling act and debt can spiral out of control if they are not managed effectively.

Make extra cash

Most people have items in their home which they no longer use, this can be turned into extra cash if you sell them either on an online auction site such as ebay, car boot sales and facebook selling sites. You will have the benefit of extra cash in your pocket and a clutter free house! Perhaps you have a hobby that could be turned into a second job, or maybe you have the time to fit in a second job at the weekend or in the evenings?

To conclude, life is unpredictable but with a bit of careful planning and knowledge you can reduce the impact of any strains on your finances.