In an ideal world we would all earn far more than we spend each month, and we'd have a healthy cash reserve to fall back on should the car suddenly break down or the central heating blows up. We might even have at least three month's salary stashed away just like all the money experts tell us we should.
In reality though, it can be difficult - if not impossible - to get ourselves into this enviable position. It requires concentrated effort to reduce our outgoings and increase our income simultaneously, and it can take months if not years to succeed - during which time any number of mishaps can occur to set us back.
If you are in this position it's a good idea to consider what you would do if you were faced with a household emergency. It's not enough to have a list of useful contact numbers of local tradesmen handy to call on in such an event - you'll need to be able to pay them for their essential services as well.
You may be lucky enough to have family members that could help out, but unless they live close by it's not always easy to get hold of the cash at short notice. Your best bet is to rely on yourself and your own financial situation to help you out - if you are prepared for life's unexpected turns, you'll fare better in the long run.
The key to being able to cope with emergencies is to plan ahead. One idea is to apply for a credit card, which might help to ensure you have a quick and instant way to pay for any sudden repairs or emergencies that may crop up. Make sure you know what your credit limit is, and what rate of interest you would pay on any balance. If you think you may be tempted to use the card for any other reason you can always lock it up in a safe or cashbox instead of keeping it in your purse or wallet.
Another option to consider is to have an overdraft limit on your bank account. It's important to arrange this before any problems crop up, as you'll know then that you have a cushion already there to use. But, if you go overdrawn without permission you'll very likely have to pay for the privilege.
In order to keep your financial situation healthy, it's important to recognise the difference between a need and a real emergency. Needing a new car because the old one has shabby seats and the odd spot of rust is very different to having to get one because the engine has blown up. Learning to distinguish between the two situations will help to ensure we make sensible decisions that don't lead us into unnecessary debt.
