Anyone can face a financial emergency at any time. We are often unprepared to face a financial issue since we do not anticipate it in the first place. Of course, we don’t know what the future holds, but it’s best to prepare for the worst while we hope for the best.
A financial emergency is a situation that causes your income to reduce directly or indirectly, or it could be a situation where you are unable to earn. Similarly, an unexpected or sudden increase in expenses is also a financial emergency. Thus, any negative unexpected financial situation can be considered a financial emergency.
Even though countries like New Zealand have steady economic growth and are counted as one of the world’s wealthiest countries, every individual encounters different circumstances. The good news is that it is quite easy to acquire a loan for NZ citizens, and there are many other options to combat financial difficulties.
Here are five financial emergencies that anyone can face in their life and tips on how to overcome these situations.
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- Losing Your Job:
In case you lose your job, it will take some time to find a new one and get back on your feet. Meanwhile, you will need to pay for all the expenses like rent, utility bills, groceries, paying your children’s school fees, expenses on healthcare, etc. With your main source of income gone, it will drain you of your motivation and energy to keep on spending while you have no earnings. Increasing inflation can make the situation even worse.
To tackle this situation, you need to prepare in advance, or if you are already in such a situation, you need to act fast before things get worse. In a financial issue like this, you can take a loan from reputable companies in your area. For example, if you live in New Zealand, you can utilize the services of Nectar’s instant cash loans online no paperwork required, and you can get a quick loan. Another way to overcome this problem is to have a passive income source. Even when you work a 9 to 5, try to get an income from other sources as well. When you lose your job and are looking for one, taking on freelancing projects is a good way to earn.
- Failed Investment:
Investing your money is the best way to earn profit and increase your wealth. But sometimes, your investment ends up doing the exact opposite for you. When you invest in something, there is always a risk of bearing a loss. Sometimes you gain profit or bear a minor loss; other times, your investment doesn’t pay off at all, and you have to bear huge losses. This is a financial emergency, as the money you were relying on to generate more money not only fails to generate a high return but puts you in financial distress. Sometimes a minor change in the financial market completely shifts the situation, turning profits into losses.
Avoid such situations by conducting thorough research before you invest. Don’t rely solely on future growth prospects. Future growth prospects are helpful but must not be the only motivating factor behind your investment. Ensure you take the advice of an expert before investing. Also, it’s not wise to put all eggs in one basket. Having a diverse investment portfolio is safer.
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- Medical Emergencies:
A health setback can cause financial strain. Health or medical-related financial problems are very common and daunting, as you must tackle two problems simultaneously. Not only do you have to take care of your health and worry about the prognosis, but you also worry about the expenses. A health emergency is not always about you. Someone in your family can fall sick, too, adding to your tension.
Anyone can get sick, face a chronic illness, get into an accident, develop a disease, develop an infection, etc. In most cases, you need regular medication, which is quite expensive. Similarly, if someone needs surgery in case of a serious issue, the financial strain increases.
To handle medical expenses, always set aside savings that you can use in urgent situations. In the long run, eating healthy, exercising regularly, avoiding stress, staying hydrated, etc., are mandatory to ensure a healthy life and avoid illnesses in the first place.
- Natural Disasters:
Natural disasters have become more common with global warming and practices by industries and people that are harmful to the environment. Due to the earth’s rising temperature and deteriorating environment, the weather is becoming more extreme. This means excessive snowfall, heavy rains, storms, thunderstorms, etc. The sea levels are increasing, causing floods; the monsoon rains have been ruthless. Earthquakes, tsunamis, etc., are becoming common nowadays. Natural disasters can cause many financial problems, as they can cause damages to or loss of property, or someone can incur any injury.
Relief depends on the area where you live. If natural disasters like floods or earthquakes are common in that area, you will need an emergency fund since you will need to repair your house often. Emergency house repairs are not cheap. If a tree fell on your house, the roof was leaking, or the windows shattered, etc., you will need to repair those as soon as possible because your family’s safety, security, and survival depend on it.
It’s best to keep a separate fund to avoid financial stress during natural disasters
- Emergency Car Repairs:
A car-related emergency can be a financial challenge if it’s a bigger issue than just getting a flat tire. Car repairs become financial emergencies when you realize that a broken-down car means you need alternative transport now. If your car was your primary transportation for commuting to work, it could become a huge problem. Now you have to get immediate alternative transport. If there are some serious damages to your car, it will be costly to repair and take longer. Meanwhile, you will have to use public transport, which will add to your expenses if it’s not free.
To avoid unexpected car-related expenses, keep it in good condition; otherwise, you will end up spending more on repairing if you don’t spend enough on maintenance.
Conclusion:
One is bound to face some financial emergencies at some point in life. And in such emergencies, the people who come out successful are those already prepared for such scenarios. Consider the tips we’ve given above to prepare yourself for any of these financial emergencies.