Unexpected bills might seem like a small hurdle to overcome, but if they aren’t handled properly they can cause significant financial problems. In addition to this, if you have a family to provide for, it’s essential that unexpected bills are dealt with in due course so that they don’t have a damaging effect on your family’s finances.
Research from prepaid Mastercard® providers, icount, found that over a third of Brits cited unexpected bills as the main reason for missing a rent or mortgage payment. This is a concerning fact because missing mortgage or rent payments can lead to more serious consequences, such as repossession.
Fortunately, there are a few easy tips that you can follow to stay in control of your finances when unexpected bills hit. Read on to discover what these are.
Ditch any expensive habits
There are often areas that all members of your family can cut back on, in order to be better prepared for any unexpected expenses. No matter whether it’s taking one car on the school run rather than two, or switching to cloth nappies rather than disposable ones – even the smallest changes can make a large difference to your finances over time.
Start a rainy day fund
Saving up a small amount of money each month and setting this aside for a rainy day is the ideal way to prepare yourself for those random bills. On the whole, you should save between 10 and 20 percent of your overall income. If you’re saving with your partner, this can be upped to 20 to 40 perfect of your combined income.
Of course, it’s always best to save what you can afford, no matter whether this is spare change or a regular lump sum every month. Over time, you’ll build up a healthy rainy day fund that will keep you prepared for any financial emergencies.
Borrow money from a family member or friend
If you’re hit with a surprise car repair bill or boiler replacement fees, it can be tempting to get a loan to cover the costs. However, this can leave you with even more financial problems if you can’t pay off your loan in the future.
Instead, it’s always best to see if you can borrow the funds from a family member or friend. This is because they are likely to be more forgiving with repayment, however, it’s a good idea to outline a repayment plan detailing when they will get their money back to avoid conflicts further down the line.
With a bit of forward planning and preparation, you’ll be able to cope with those unexpected financial hurdles with ease. If you’re finding it difficult to manage your family’s finances, use the tips above and speak to money experts such as the Money Advice Service to get help with money management.