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Unexpected expenses are just a fact of life. Nobody wants to think about it, especially if we are not prepared for all the little or big unexpected expenses that might come our way. And even more so if we don’t think we can afford to sock some extra cash away.

It can be difficult to build up an emergency fund for all those unexpected expenses; especially if you are living from paycheck to paycheck or up to your eyeballs in debt. Yet, it’s more important than ever to plan for unexpected expenses when you are in these situations.

Why you need to plan for unexpected expenses

You really need to plan for unexpected expenses because it’s just a matter of time before it happens. The transmission blows on your car right around the time your daughter needs braces and your washing machine decides to call it quits. All of these are unexpected expenses are something we need to deal with throughout life.

Being prepared as much as you can is your best bet when life throws you a financial curve ball.

How to plan for unexpected expenses

Do your best to anticipate upcoming expenses. If you’re driving an older car, or your dishwasher has seen better days, start saving up to replace the item. You may also want to start keeping an eye out for good deals on the replacement.

An even better strategy is to have an emergency savings fund. Set up a savings account and add to it monthly. Use it only for completely unexpected expenses. Make sure you know what’s in the account. And once you have to take money out of it replace it as quickly as possible.

You should set up a separate savings account that is not linked to your regular checking account that you use to pay for everyday expenses. This will help to keep you from dipping in your savings for just a few bucks here and there. Because, as we all know, a few bucks here and a few bucks there will end up draining your savings pretty quickly. 

I even go a step further and have my savings account at a totally different bank that is quite a bit out of my way. This way, it makes it really inconvenient and very unlikely for me to use my emergency savings for non emergencies. 

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How to recover from unexpected expenses

When you have to use your emergency savings because you will need it, then you should try to replace any money used as quickly as you can.Here’s how to recover quickly after that purchase. Go over your budget (you have one of those, right?) and look for ways that you can temporarily cut back on some things. Stop ordering pizza every Friday night and make your own at home. Skip a night out on the town and watch a couple of movies on Netflix instead of going to the theater.

Use the money you’re not spending for the next few months to refill your emergency fund. For an extra boost, work a few hours of overtime, do a few freelance projects or temporarily pick up a part-time job to get back on track fast.

How to handle unexpected expenses before you’ve had a chance to build an emergency fund

But what do you do when the expense comes up before you had a chance to set up the emergency fund or have enough money saved? First of all you need to take a deep breath and assess the situation. Can you make do without the item for a little while? Just long enough to scrape together the funds to repair or replace it. If it’s the dishwasher, that’s easy. You can wash dishes by hand for a little while. If it’s the fridge or the car you rely on to get you to work each day, that’s a different story.

If you need the item that broke, evaluate if it would be less expensive to repair than replace. Even if it isn’t the perfect solution, it may get you to work until you can save up for a different car. Shuffle your money around, find a temporary part-time job, side hustle and do whatever it takes. If you have absolutely no other options then you may need to charge it.

What you have to do if you need to charge unexpected expenses

If you have absolutely no other way to pay for unexpected expenses except to charge it. Then your one and only goal right now is to pay off that expense. Do whatever you can to cut back on you monthly spending. Give up some services, meal plan, shop sales and use coupons. If you stick every penny of discretionary income into paying that debt, it won’t take you long.

Once your bills and credit cards are paid off, do what you can to get that emergency fund set up. Keep on doing whatever you can to cut back on monthly expenses and put those savings into your emergency fund until you have enough saved up to cover more unexpected expenses down the road, because you know something else will break down the road. 

If you want more help in this area, you are welcome to take my FREE 7 Steps to Financial Freedom email course. 

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