October 24, 2016

Unexpected Expenses Near Christmas – Funding Normal Life

It’s a common aspect of life; you always plan for the things that usually happen. You’ll save roughly the same amount for the weekly shop and the same amount for petrol in the car for the journeys to work and to the supermarket.

Anyone who has had the misfortune of facing an unexpected expense will know what havoc it creates when trying to find the funds to take care of it.
Depending on what it is, you may be able to claim on your insurance – if you have it – but that could put the price up the next time you need to renew it.

Either way, the expense can make a real difference to your finances, which will in turn bring disruption to your monthly budget.

Add the high costs and perhaps even more hectic nature of Christmas and an unexpected expense can really have an impact on your finances.

Research suggests that the average family will spend £125 on festive food and drink this year, and will spend around £500 on Christmas presents.
As a grand total this amounts to the average family spending nearly £625 over the Christmas period.
For many people this would leave them with very little to save for paying bills, so how would they cope if an unexpected expense occurred at the time?


1)      Rainy Day Fund

One method of coping with an emergency is by setting up a rainy day fund. You can do this by setting up a new account, and then set up a standing order from your main account to transfer a small amount of money each month, soon after you have been paid.

However, setting up a rainy day fund can take time. It is something that you should keep paying into for a long time, and something that you should hopefully not have to dip into very often.

2)      Borrow Money

If there is a serious need for funds quickly, then your main option will be to borrow money.

Most people will go to their parents regardless of their age, although some may not be able to borrow from their parents and will have to go to look elsewhere get the money they need.

High-street banks are the obvious choice, as they offer the lowest interest rates, but some may be excluded by their strict eligibility criteria.

For those with poor or bad credit, going to a guarantor loan company or credit union could offer the best solution.

They both have lower APRs than the likes of payday loan companies, and allow you to borrow over longer periods meaning there is less pressure to pay off the loan amount in one go as can be the case with payday loans.

A credit union exists on a not for profit basis, but as a result it means that those who want to withdraw funds from the organisation often have to pay into it for as long as 3 months before being allowed to withdraw.

A guarantor loan is a much speedier option for borrowing. To obtain a loan the borrower needs to have a guarantor, who is someone who is willing to guarantee that the loan can be repaid. They have a higher APR than credit unions and traditional lenders, but can offer the convenience and security of providing funds to you quicker than most credit unions.