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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 them.
Even more so if we don’t think we can afford to sock some extra cash away for a rainy day. It can be difficult to build up an emergency savings fund for all those unexpected expenses.
It’s even more daunting if you are living from paycheck to paycheck or are dealing with debt. Yet, it’s more important than ever to plan for unexpected expenses when you are in these situations.
Instead of letting unexpected expenses bust your budget, planning for them is your best line of defense.
Defining Unexpected Expenses
Unexpected expenses are expenses that arise that are out of the realm of your regular monthly, quarterly or yearly budget obligations.
And, here’s the kicker, you had no idea that you are going to get hit with these expenses Hence the reason that they are unexpected.
Many people consider a car breakdown a surprise expense, and, many times they can be. But there are times when it really is not unexpected.
For instance, you’ve noticed that your car is missing every once and a while and it’s been getting a little worse as time goes by. Is it really a surprise when it finally breaks down?
This is something that probably should have seen coming and an expense that you should have been preparing for by saving up some money. It really isn’t in a truly an unexpected expense.
How to Avoid “Unexpected” Expenses
With that being said, if your car is only a few years old and hasn’t shown any signs that there is anything wrong, your car breaking down would be considered unexpected or a surprise expense.
As mentioned above, many of what we typically consider an unexpected expense really isn’t that unexpected after all. These are things that we should see coming and start planning for as soon as possible.
If you know your vehicle has been acting up, go get it checked out before it conks out on you. It’s much easier to deal with when you know what’s wrong and how much it’ll cost to repair.
If you can’t afford to have it fixed right away, at least you’ll know what to expect to have to pay to have it repaired once it does. Start saving for that expense now so it doesn’t make such a big impact on your budget later on.
Heck, you might even find out that it’s a simple fix and really didn’t have anything to worry about in the first place.
Types of Unexpected Expense
Real unexpected expenses are just that, unexpected. Things you never saw coming, and are totally blindsided by them when they happen. This could include (but not always) things like…
Medical Emergencies or Injuries
Death in the family
Last minute gift purchases
Again, if you’ve had warning signs that there is something wrong or about to happen, you should be prepared for the worst and start planning to deal with them sooner rather than later.
Then there are times where you could have never seen something coming. These are true unexpected expenses.
Plan for Surprise Expenses
Even though we never know when a surprise expense is going to come our way, we really should try to prepare for them because it’s just a matter of time before it happens.
You’d be fooling yourself if you don’t think that it’ll ever happen to you. This is where building an emergency fund comes in to play.
If you don’t have any savings for emergencies, then the first thing you need to do is start one today. Work on getting your first $1000 put aside.
Your ultimate goal would be to save 3 to 6 months’ worth of expenses. Having a safety net will help you keep your head above water should you lose your job or got injured and couldn’t work for an extended period of time.
This might seem like a lot of money to set aside and it is, but being prepared as much as you can is your best bet when life throws you a financial curveball.
Planning For Not So Unexpected Expenses
Do your best to anticipate upcoming expenses. If you’re driving an older car, or your refrigerator has seen better days, start saving up to replace the item.
You can also start keeping an eye out for good deals on the replacement to minimize the financial blow on your budget.
Start putting money aside now to pay for these things if you know they are coming. Create a budget that includes saving money for these things.
You know they’re coming, you see the signs. Starting to preparing for them sooner rather than later is always the best option so you don’t have to depend on your emergency savings if you don’t need to.
Not sure you can afford to save up for all these home repairs that might come your way? You might want to check out Choice Home Warranty. It’s a home warranty program that will pay for repair or replacement of major home systems and appliances.
You can get a free quote hear with no obligation.
How to Recover From Unplanned Expenses
No matter how much you plan for all the financial blows you might get hit with, there will still be times when you have to use your emergency savings.
If you do have to deal with an unplanned expense, your best bet is to replace the money as soon as you can so you are prepared for the next surprise that may come your way.
Here’s how to recover quickly after that purchase. Go over your budget planner(you have one of those, right?) and look for ways that you can temporarily reduce your expenses.
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.
What to Do If You Don’t Have an Emergency Fund Yet
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 to replace an 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 by until you’ve had time to save up to replace it.
Using Credit To Pay Unexpected Expenses
If you have absolutely no other way to pay for unexpected expenses; you may need to take out a personal loan or use credit to pay for it.
Going back to your car breaking down unexpectedly as an example. If this is your only way to get to work, then you’ll have to get it repaired no matter how much it’s going to cost.
You can’t just let your job go because of this or you’ll be in a bigger financial bind. This would be a scenario where you have no choice to use credit.
If this does happen, then your one and only goal should be to pay it off as soon as possible. Do whatever you can to cut back on your monthly spending. Give up some services, start meal planning, shop sales, and use coupons.
Find ways to earn more money to pay off your debt. Work more hours if you can, take on a side hustle, sell stuff that you don’t need, or want.
If you set your mind to paying that debt fast and are totally focused and committed to doing so, you’ll get it out of the way so you can keep working on getting that emergency fund set up.
Unexpected Expenses Conclusion
Unexpected expenses can be discouraging to have to deal with. Even more so when you’re trying to get ahead financially.
You’ll have no choice but to deal with them when they come up, even if you are broke and have no money to afford these things to happen.
Your best bet is to expect the unexpected and do whatever you can to prepare yourself financially. This way you can put them behind you and get on with your life.
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