Business, Features

Managing The Unmanaged

FINANCIAL emergencies often arrive when you least expect them; your vehicle breaks down, your computer stops working or illness strikes you with an unexpected medical and pharmacy bill. How well-prepared are you to be able to cope and overcome those challenges? The preparations you have put into setting up an emergency fund will determine your ability to glide past these emergencies or, are you more likely to be unable to pay your mortgage or rent when a problem occurs?

The key to managing an emergency, financially, is to regularly put a small amount of money away, preferably into a safe bank account that is earning some interest. The difficulty is to learn how to leave that money alone, unless an emergency strikes.

Should an emergency need dealing with immediately, you may be able to turn to relatives or friends who may have some spare funds to help you through, although it is unfair for those close to you, to suffer financially, because of your problems. This is why it is important that any deal that involves borrowing money from a relative or friend, you put into writing, so that you don’t fall out later when the other party understands the verbal agreement in a different way to you.

You may be able to negotiate a payment plan with the individual or company dealing with your financial emergency. Will your doctor allow you to pay a smaller amount over two or three months or will your vehicle mechanic consider a similar payment plan?

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To organise your own emergency fund, you must first decide how much money you can afford to put away and not touch, from every pay packet, throughout the year. You may decide to find a second job to provide you with extra funds to be able to save sufficient money regularly, or you can look at your budget and find any small cuts that you can make that might provide you with enough funds to be able to save regularly.

When you access your emergency fund for the right reasons, it is important to remember that the money must be replaced, as soon as possible, so that your emergency fund is of sufficient size to be able to deal with virtually anything that may occur.

The size of your emergency fund will vary from one person and family to another. The best idea is to consider what size of emergency that you could not cope with and which might cause you terrible financial cash flow problems – and that will become your fund target, as a minimum.

There may be times that you can move more of your spare money over to your emergency fund to boost the amount available because you do not know when you may suddenly become out of work at one extreme, or receive a large bonus payment from your business, at the other extreme.

By planning an emergency fund, you will be able to deal with almost any emergency as an everyday event, knowing that you can cope with it, stress free from worrying about your financial cash flow.

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