Preparing for a Financial Emergency: Top 6 Tips

No one can tell when exactly an emergency will strike, and being unprepared for one will do more than simply cause additional anxiety and stress. At worst, the lack of preparation can also disrupt one’s long-term financial stability or quality of life. For instance, if you don’t have the emergency funds to cushion an unexpected medical expense, then you may end up having to take money from your savings or use up part of a budget that’s already planned for other financial obligations just to cover the costs. Before you know it, this may snowball into more financial problems down the line, such as bills piling up and then draining your savings completely.

There’s no such thing as being too quick to prepare for financial emergencies. You should put the focus on recovering quickly should an emergency happen so that you can protect your long-term financial health. To that end, here are some tips that can help increase your financial preparedness for when emergencies arise:

1. Build an Emergency Fund

An emergency fund can be incredibly helpful during tough times such as job loss, medical emergencies, or unexpected home or car repairs. Knowing that, make it a priority to start building one, even if you can only set aside a small amount of your income each month.

Put your emergency funds in a separate account that’s easily accessible so that you can withdraw money quickly whenever it’s needed. One option would be to put your funds in a high-yield savings account, so that you can earn more on your money while it’s not being used.

2. Know All Your Borrowing Options

You should also do exhaustive research on your borrowing options in advance to ensure that you’re prepared to make the best decision when funds run low. A credit card cash advance on your Landers Cashback Everywhere Credit Card by Maya, for instance, can provide you with quick access to cash and can be conveniently withdrawn from a nearby ATM when needed. As cash advances incur different fees from regular credit card purchases, do make sure to read your card provider’s terms carefully before using this service.

In general, you may be able to rely on your credit card to cover essentials such as groceries or utilities in the meantime during emergencies, giving you some breathing room in your expenses. You can even take advantage of rewards to help reduce your out-of-pocket costs. For example, using the cashback rewards from your Landers Cashback Everywhere Credit Card can make grocery shopping much more affordable and allow you to save money that you can allocate to other expenses.

Personal loans, either from traditional or digital banks, can also be quite helpful, as these often come with manageable repayment schedules to make paying back the loan easier. Overall, weigh the pros and cons of your borrowing options to save you from accumulating excessive debt while still being able to address your immediate needs.

3. Diversify Your Income Sources

It can be risky to rely on a single income source, especially in times of financial instability. Consider supplementing your income with side hustles or passive income to ensure that you’ll always have a source of funds when emergencies arise.

Possible side hustle options include freelance jobs such as online tutoring or virtual assistance or starting an online business. Meanwhile, passive income can come from investing in mutual funds or renting out a property. Explore your options for additional income, and you’ll be able to boost your emergency funds and savings over time, thus significantly strengthening your financial position.

4.Secure Adequate Insurance Coverage

Insurance is a proactive way to protect yourself from devastating financial setbacks caused by emergencies. Your health insurance can cover costly medical procedures such as surgeries, while life insurance can provide security in case of unexpected loss. Meanwhile, other types of insurance, such as car or home insurance, can shield you from damage or theft and bring you significant peace of mind.

Before you get any type of insurance, do make sure you review your policy carefully, particularly what it covers and what it doesn’t cover. Don’t hesitate to shop around for offers first to find an insurance program that best suits your needs and financial means.

5. Stay Informed About Government and NGO Assistance Programs

Both the government and non-government organizations (NGOs) can be your lifeline during times of crisis. For example, the Philippines’ Department of Social Welfare and Development (DSWD) grants financial assistance for medical needs or livelihood support. Meanwhile, NGOs such as the Philippine Red Cross will provide relief in disaster-stricken areas. Research the eligibility requirements and application processes for these programs in advance so that you can act quickly when the time of need arises.

6. Invest in Skills That Boost Resilience

Lastly, take the time to learn new skills which will make you more flexible and better equipped to handle financial challenges. For example, financial literacy skills will help you make smarter money decisions. Upon learning to handle your finances better and make the most sound investments, you’ll put yourself in a better position to withstand financial emergencies.

Meanwhile, marketable skills such as graphic design, coding, or digital marketing can open up opportunities for freelance work or better employment. These can serve as additional sources of income for when you need additional funds to cover unexpected expenses. Indeed, investing in yourself may be the best way to remain competitive and resourceful even during difficult times.

Don’t let yourself be caught unprepared when a financial emergency befalls you. Let this article be your guide in preparing yourself—both financially and mentally—before an emergency happens. When tough times come, you’ll be better equipped to deal with them without putting your financial stability in jeopardy.