Money is something that most of us worry about. We manage to pay our bills on time, but anything else can be financially crippling. Unfortunately, significant expenses crop up. Sometimes, we need to buy things to make life more manageable, such as a car. You might need to invest money in your business or purchase new technology for your home. On other occasions, these expenses are unexpected. You might find yourself in need of replacement furniture or kitchen equipment, your boiler might need replacing, or there may be damage to the structure of your home. You have to spend money. These unexpected expenses often crop up when we can least afford them. Perhaps shortly after a holiday or event.
When faced with a significant expense, you might find yourself panicking. Worrying that you’ve got no options, you can’t afford what you need, or that you are going to get into deep debt to get through. The first thing that you need to do is take a step back. Don’t panic and rush into decisions. Take some deep breaths, understand your situation, and know that there is a way out or a way to save money on those big expenses.
Take the Time to Explore Your Options
In most cases, we’ve got options, and often much more than we might imagine. If your car breaks down, for example, rushing out and buying a new one certainly isn’t your only option. You could look at more affordable options like searching for a Used Ford Fiesta for sale, which can be more cost-effective. You might not even need a replacement at all, get some quotes for repairs before rushing out and car shopping.
When it comes to big purchases, don’t rush. Take your time to explore your options, thinking about what you can afford, financing options, interest rates, second-hand purchases, and if you can, waiting for sales and discount offers. Comparison sites can be a useful tool when it comes to saving money.
Make Sure Whatever You Buy Will Last
The last thing that you want is to spend a fortune on something, whether a product or repair, only to find yourself needing to do it again a few months down the line.
If you are spending money on a repair, or other work around the home, it sometimes makes better financial sense to spend a little more the first time. Hiring skilled and reliable tradespeople and using quality parts, so that the work will last, and not need doing again, or further repairs in the not too distant future.
Likewise, when you make a purchase, the cheapest isn’t always the cheapest for long. 3 Pairs of £20 boots might not last as long as one pair of £100 that you got for £50 in the sales. Shop smart, and your money will go further. But, this doesn’t mean that the most expensive is always the best, you can be trapped into paying for a brand name, instead of quality. Take your time, compare products, and read reviews before spending.
Plan for Them
Some significant expenses can’t be planned for, things break, often without warning, and need repairing or replacing. But, others you can. If you know that you are likely to need a new car in the next year or two, start putting a little aside now, as well as researching cars and financing options. It’s never too early to begin saving towards a deposit on a house, or even your retirement, and opening specific accounts or funds can be a big help. You could even have an account set up to buy yourself clothes in next year’s January sales. You know you’ll need something new eventually, it shouldn’t come as that much of a shock.
General savings funds are great, but specific pots, perhaps using a savings app to both save and separate your money, can give you greater control.
Keep an Emergency Fund
You might not be able to plan for specific unexpected expenses. They wouldn’t be unexpected if you could. But, you can prepare for the fact that at some point, perhaps even regularly, something is going to go wrong. That’s life. Unfortunately, it throws us curve balls that we have to deal with.
So, be prepared. An emergency fund growing steadily in the background, perhaps in a high-interest account with a direct debit sending money every payday, means that you’ll never have to panic or borrow when something comes up. Generally speaking, having more saved, will also give you greater options in terms of shopping around, taking your time, and even borrowing or financing, which can save you money on interest and repayments, as well as your purchase.
Avoid Using Credit Cards
If a big expense comes up, a credit card can seem like an easy way to deal with it, and many card companies will even offer you an interest-free period, to make it seem like the perfect solution. But, these interest-free periods aren’t normally long enough for you to pay off the debt. Try to avoid credit cards when you can. If you need financial assistance, interest-free financing is always a better option.
Save In Other Places
You can’t always save money on your significant expenses, there aren’t always sales and deals when you want them, and cheaper products aren’t always worth it. In this case, ask yourself if you could save money in other areas to fund your expense without getting into debt or affecting your quality of life. Some great places to save money include:
– Housing. For most of us, housing is our largest outgoing. If you are renting, you might not have much choice. But if you own your home, remortgaging to a cheaper deal with better rates can reduce your outgoings significantly. Just make sure you understand the risks and how this might affect your long term repayments.
– Transport. Transport is another big outgoing for many of us. If you face a long commute, you could be spending a fortune on gas and parking, or train tickets. Look at ways to save. Could you park somewhere further away or drive more economically? Would buying an annual ticket, or using different stations reduce your ticket costs?
– Food. Food bills are significantly higher than they were just a few years ago. But, there are still ways to save. Get organised with meal plans and shopping lists, try unbranded products, and shop the reduced aisle, utilising your freezer to keep things fresh.