What Steps can you Take in a Financial Emergency?

What Steps can you Take in a Financial Emergency

The unprecedented scale of the Covid-19 outbreak has increased already widening divisions in South Africa between the haves and the have nots. Millions of people who have been working hard to better themselves have been thrust into poverty through no fault of their own. Although the situation may feel desperate, there are some steps you can take to help you emerge from a financial emergency.

Keep calm

That’s easier said than done when you’re struggling to pay your rent and are receiving demands from utility providers, but the last thing you need in this situation is a knee-jerk reaction. Instead, consider your position very carefully, run through your options and discuss your situation with people whose advice you trust before you make any decisions.

Borrow from friends and family if you can   

No one likes to borrow money from friends and family members, but just think that if the roles were reversed, wouldn’t you want them to come to you? This is the best source of short-term financial assistance because interest rates will be low and the terms will be favourable. If you can borrow money from family and friends, make sure you write the terms of the loan down and be realistic about how much you can afford to repay and when.

Do you have possessions you can sell?

As much as it might pain you to do so, most people have possessions that they could live without. For example, if you have a second car that you hardly use, expensive items of clothing or a PC and a laptop when just one would do, this could be a source of quick cash to help you make ends meet. Although this is certainly not a long-term solution, it could buy you some time before more drastic decisions need to be made.

Explore your short-term finance options

If you’ve explored all of your other options and still have no solution, it could be worth taking a look at the short-term finance products that are available to you. At least then you’ll know exactly where you stand. There’s certainly a time and a place for the sort of instant loans offered by lenders like Wonga.

The cash will be in your account the same day and you’ll have plenty of flexibility about the amount you borrow and how long you borrow it for. However, this is only a route you should take if you’re absolutely certain you can afford the repayments and time is of the essence – explore other credit options first.

Set up a rainy day fund

This one is the most important but probably the least helpful to you if you’re in an active financial emergency situation. Something to bring forwards with you once you get your finances back on track, you’d be wise to save any money you can to put towards a rainy day fund. Ideally, this will cover your outgoings for between three to six months. However, anything you can put aside will put you in a stronger position to deal with a financial emergency in the future.

What are your tips for surviving a financial emergency? Please share your tips with our readers in the comments below.

Related posts

Here are 5 reasons why a mutual fund SIP calculator is the best tool for planning your investments

Akarsh Shekhar

Value Stocks: Understanding It and How to Invest

Nehita Abraham

The current state of the UK property market

Akarsh Shekhar