As stringently as you might plan out your finances on a regular basis, there are going to be times when unexpected expenses come to the fore. The main problem here is that without proper planning, these expenses can throw a serious wrench into whatever plan you had for how you were going to spend your money in the short and long term.
Sometimes, these unexpected expenses may seem like small inconveniences. Maybe you get a $40 parking ticket that you need to deal with, or maybe you accidentally let some food spoil and need to run out for an extra grocery run. While these aren’t things you’re going to want to deal with, for some people, they may be more of a minor inconvenience than a major problem.
On the other end of the spectrum, some emergency expenses can cause some serious harm to your finances. For example, what if you run into a medical emergency that your insurance won’t cover, or maybe your car needs a serious repair that’s going to cost you thousands of dollars?
While emergency situations may look different to everyone, there are some that can be more common than others. To start, we’re going to go over a list of unexpected expenses that you may see pop up, and then give you some tips on how to deal with them.
6 Common Unexpected Expenses Examples
There are all sorts of different categories of emergency expenses out there, and whether one applies to you or not is going to depend on a number of variables. Let’s take a look at six unexpected expenses examples that you may run into at some point down the road.
1. Car Repairs
Regardless of your familial situation, your car can often be one of the most essential tools you use on a day-to-day basis. Maybe you need it to get to work, or maybe you need it to get your kids to and from school. Whatever the case may be, for a lot of people, going without a car for an extended period time just isn’t an option.
The problem is that cars aren’t cheap. And we’re not just talking about the cost to buy one. Maintaining a well-functioning car can get expensive between the cost of gas, insurance, and regular maintenance. So, when an unexpected repair is needed, it can be a tough financial blow to deal with.
2. Emergency Home Repairs
Any homeowner knows that there are all sorts of emergency expenses that can crop up when it comes to maintaining your home. This can include plumbing issues, problems with appliances, electrical issues, and more. Dealing with these unexpected expenses on top of your normal household expenses can be a challenge.
3. Emergency Family Expenses
Family emergencies can be a scary thing to deal with and often need to be taken care of right away. Maybe you have a child at university and they’re suddenly telling you that tuition costs are going up and they don’t have the money to cover the difference. Or maybe you experience a death in the family and are suddenly faced with funeral expenses that you hadn’t budgeted for. Whatever it is, speed is usually of the essence.
4. Emergency Vet Expenses
Between food, vaccines, grooming, and more, owning a pet can get expensive. This overall cost can skyrocket if your pet starts to have unexpected health problems that lead to even a single visit to the vet, let alone recurring visits. And their costs can get even higher if they require any type of surgical procedure.
5. Medical Expenses
Depending on what you’re dealing with, unexpected medical expenses can get expensive. While your insurance may cover certain issues, it may not cover everything, or may only cover certain things up to a specific threshold.
6. Emergencies Caused by Natural Disasters
As occurrences like earthquakes, floods, and tornados become more commonplace in certain parts of the country, damages caused by natural disasters may be a more realistic thing to contemplate. While you may have insurance that can help with any related expenses, it may not cover everything, resulting in huge repair bills to your home.
3 Tips to Help you Manage Unexpected Expenses
Whether you’re faced with an unexpected expense or you’re trying to prepare yourself for having to deal with one in the future, here are some tips to help you manage the process of dealing with emergency expenses.
1. Establish an Emergency Fund
When you’re building your budget for the upcoming months, look beyond the expenses that you know are coming down the pipeline. While everyone’s budgets are going to be different, try to decide on a certain percentage of your budget that’s going to be cash that you set aside solely to deal with unexpected expenses. While you may not know what those expenses are going to look like, when they’ll come, or if they’ll even pop at all, it’s best to be prepared for the unexpected.
On that note, if you’re able to set aside this money and it doesn’t end up getting used, put it towards an emergency fund. This should be a standalone savings account that houses cash meant to deal with emergency expenses. You should never use this money for anything else.
While not everyone’s situation is going to be the same, it may be a good idea to save of several months’ worth of living expenses. If any major changes happen in your life, like loss of a job or something similarly impactful, you’ll have a good amount of money to fall back on until you get back on your feet.
2. Apply for a Personal Line of Credit
While it’s good to budget for unexpected expenses, there may be times where you get caught without savings to fall back on in a time of emergency. If this happens, one potential option would be to apply for a line of credit. If approved, you’ll gain access to a credit limit from which you can draw funds from on a revolving basis. It’s a flexible borrowing option that’ll allow you to borrow the exact amount you need up, as long as you have available credit. Just make sure that you’ll have the money to repay what you’ve borrowed plus any additional interest/fees that you might face before you apply for credit of any kind.
3. Don’t Overdo it with your Credit Card
While a credit card can be a useful financial tool to have at your disposal, it can also do some serious harm to your financial standing if you’re not careful. If you start to charge large expenses to your card without the means to pay it off by the end of your billing cycle, the interest you’ll need to pay can seriously add up. You may also do damage to your credit score. Just like a line of credit, you’re going to want to make sure that any time you use your credit card, you’ll have the means to pay it off in time.
Have a Plan to Deal with Unexpected Expenses
Dealing with an unexpected expense can be one of the scariest things to deal with in life, especially when you don’t have the money saved up to deal with it. The best thing you can do is to prepare yourself ahead of time. Building an emergency fund and budgeting for the unexpected are the best ways of doing this.
If you do get caught without a well-stocked emergency fund, a line of credit may be a potential option. Just remember that taking on debt is not something that should be done lightly, so you’ll want to make sure you understand the implications and have a plan in place to pay off what you’ve borrowed.
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