8 ways to cover an unexpected expense

We’ve all been there - you’re 4 days from payday, you hear a strange sound from your car, your phone goes kaput, or your dog eats something mysterious and needs a trip to the vet.

All of these cost money, and the latest research suggests we spend an average of £500 each year on unexpected bills.

Borrowing money at the last minute can be expensive, with overdrafts now costing up to 40% interest! While in an ideal world we would have an emergency fund saved up, for those of us who don’t have the cash sitting around, here are 8 ways you can try to cover an unexpected expense without turning to high-cost debt.

1. Negotiate your bills & cut costs

With millions of households overpaying for a whole range of household bills such as energy, broadband, credit cards and mobile, when was the last time you checked to see if you could save money? On average, UK homeowners are overpaying their energy bills by £220 a year! If you have a fixed-term contract that’s expiring soon, or you’re currently just paying month to month then it’s time to shop around and negotiate. You may also have other employee benefits that will help give you a discount at retailers and utility companies, e.g. Perks at Work, Perkbox, Vitality. The extra money you free up can then be put towards your unexpected bill.

2. Sell things online or at a garage sale

This one might seem obvious, but have a look around your house for anything that you could put up for sale. Facebook Marketplace, Gumtree and eBay are all sites that you can use to sell unwanted items, or you can sell unused gift cards at sites like cardyard.co.uk.

3. Sell your old phone or iPad

While we’re talking about selling things, old technology especially could be worth digging out of a draw. Several companies offer buy-back schemes such as O2 Recycle, Giffgaff, Mazuma Mobile and EE.

4. Check you’re getting any the benefits you’re entitled to

You may be entitled to more money than you think. If your household is on a lower income, or if you’re raising children, you might be entitled to tax credits or allowances. This money can help cover unexpected bills or provide a boost to your monthly budget. Find out more here.

5. Sign up bonuses e.g. from switching banks

Several banks offer cash incentives to switch to them - sometimes up to £175. Take a look online to find the best offers. You’ll often need to have a certain income going into the new account, and change some direct debits. While this can be a great way to get some quick cash, be wary of continually switching accounts if you’re looking to borrow in the near future. Lenders like to see stability in your accounts, so lots of account switching can have a negative impact on your credit score.

6. Reclaim past overpaid energy

If you pay your energy bill by direct debit, then it’s probably set up to pay the same amount each month, even though we spend more in winter and less in summer. This evens out your payments so you’re not overstretched in winter, but it also means you’ll build up credit over summer. If you’ve built up credit, you have the right to ask for it back as a refund - so this could be a way to get some cash quickly to pay a bill. But, just be wary that it may mean you have less credit built up to cover a big energy bill in future.

If the assumption made about how much you’ll use is wrong, you could end up with a lot of extra credit on your account for no reason. If this is the case, you could get some of this refunded, but still be able to cover your future winter bills.

7. See if you’re owed any money from the government

Speaking of claiming money back - check to see if you’ve overpaid tax and can get a refund. This might be because you started a new job and were taxed on an emergency code, or you have more than one job. You can apply to claim this back from HMRC. If you’re married, and one of you earns less than £12,570, then the lower earner can transfer some of their personal allowance to the higher earner, which saves £252 in tax.

8. Find a side hustle

This final tip works if you’ve got a bit more time before you need to get money together. Maybe you have a credit card that you can put this cost on, or the bill isn’t due for 30 days. If you’ve got a month before you need to pay up for good, finding a side hustle or temp job can be a great option.

You could do some freelance work on Fiverr, or Rev, or advertise as a local dog walker, babysitter or tutor. You can also get paid for answering online surveys, or if you have a spare room, you could rent it out (and not pay tax on the first £7,500 you earn from this).