Emergency expenses — such as a car repair or an unexpected medical bill — can put a significant financial burden on you. But there are ways you can help mitigate the burden, and it all comes down to being prepared.
Here are a few steps you can take to balance your budget in the event of an unforeseen expense:
Assess your savings
If your emergency savings won’t cover the expense, take a close look at your other savings. or money market account. If you have money set aside there, this may be the time to tap those funds.
Revisit your budget
Being hit with an unexpected expense can offer a good opportunity to take a closer look at your budget. Categorize your expenses into needs and wants, and find ways to reduce your unnecessary expenses, such as cutting back on transportation costs, utilities and subscriptions, and any unnecessary shopping. Although it may be tough to cut back, look for items you can give up for the short term or something you can cut to make up part of the shortfall.
Look to your available credit
Figure out how much credit you have and the total amount that’s available. If you still find that you’re coming up short, consider asking your lender to increase your credit limit.
Using a combination of these strategies, you may be able to get your budget back on track.
If you’re still strapped for cash, there are other emergency funding options you can consider. If this is a recurring issue, consider speaking with a credit counselor for additional guidance. The key is to stay positive and keep searching until you find a solution that works for you.