Financial Emergencies: When’s the Right Time to Break Open That Piggy Bank?

We’ve all been on the cusp of a financial meltdown before. Whether it was a sudden job loss or forgetting to bring your debit card to the supermarket for the weekly grocery run, it’s not a fun situation to be in.

 

Luckily, we should all be sitting on a pile of savings for emergency situations. If you aren’t, then it’s recommended that you start as soon as possible. Anything you can put into the savings account will be a major help the next time you experience a financial crisis. Even if you can only afford to put in a small percentage of your wages into the savings account, every little helps. Just remember not to treat it like a second bank account that you can withdraw at any time. Think of it as a digital piggy bank that must only be broken in emergencies!

 

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If you’re on the verge of cracking open the lid of your savings account, then stop right there! There are other options to consider before you dive into your savings account. The most common cause of a financial crisis is often uncontrolled spending. Perhaps you’ve subscribed to a few too many services like Netflix and cable TV, or perhaps you just splashed out on a much needed holiday. Regardless of what you’ve done, here are some tips and pointers to give you an idea on how to stop yourself from opening your piggy bank.

 

Practice Your Budgeting Skills

 

The only time you should ever be in debt or in the red is if you had an emergency. For example, sudden medical bills, repairing or replacing a car, or fixing a computer that’s vital to your work. For every other situation, you’ve probably spent a bit too much on non-essentials.

 

The best way to control your spending is to get involved with your budgeting. There are many tools and online resources that can help you control your spending. Budgeting software is often free or very cheap. All you have to do is input your salary then track every expense. You can also estimate how much you spend each week or month (depending on when you’re paid) so you know how much money you can spend in advance.

 

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Take out a Loan

 

Living with a loan can invite more debt and problems than you’d like, but it’s also one of the quickest ways to pay for an emergency or sudden expense. For example, if you haven’t received your salary yet but you need to repair your car, then you can contact your bank or another money lending service to cover the costs, then you can quickly pay off the loan at a lower interest rate. If you have poor credit, then you should contact a poor credit personal loans service, but only if you can pay it back.

 

It’s never a good idea to take out a loan to pay off debts unless they can offer you a lower interest rate or other additional benefits, so practice caution and always try to make educated decisions with a lot of planning behind them.

 

Sell Unwanted Belongings

 

A great way to collect some extra cash is to sell unwanted items. For example, if you have some unused electronics or an old laptop that you don’t use, then you can sell them on eBay or Craigslist for a quick injection of cash. It’s recommended that you do a spring clean every now and then to clear the clutter in your home, and the most productive way of getting rid of unwanted belongings is to simply sell them.

 

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Opening Your Savings Account Is a Slippery Slope

 

It goes without saying that the more often you withdraw from a savings account, the more likely you are to take money out for small reasons. For example, if you start to withdraw from your savings account just to pay for groceries, then nothing is going to stop you withdrawing a bit of money for the sake of buying a new clothes, games or electronics. Sooner or later, you’re going to find your savings account emptier than your actual bank account.

 

The best way to avoid this is to discipline yourself on staying away from your savings account. Keep the books and accounts locked away in a safe or similar secure location and try to forget about it, only resorting to it in dire situations.
Sadly, if there is no other option then, by all means, crack open your savings account and withdraw the amount you need. Don’t withdraw extra “just because” and don’t sneak out a few extra notes to pay for something like gas. Try to replenish your savings account as soon as possible, and make up for it in the future by buying less luxurious products for a week or cancelling a subscription to an expensive service for a month if possible.

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