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. Figuring out how to plan for unexpected expenses will help you in many ways.
All of these are unexpected expenses are something we need to deal with throughout life. There is no way to predict what might happen, so these tips will help you prepare a little.
Nobody said being an adult was going to be easy. In fact, I remember my parents telling me many times, just wait till you grow up. Well, I am grown up and man have I seen some unexpected expenses land on my plate.
There is no way to be 100% ahead of the game when it comes to being prepared. However, being prepared as much as you can is your best bet when life throws you a financial curveball. Having a little money set aside is better than no money.
Putting aside a little every paycheck can add up and help when life throws you a curveball. Learning how to budget and manage your money is one way to plan for unexpected expenses.
Do your best to anticipate upcoming expenses. If you’re driving an older car, or your dishwasher has seen its better days, start saving up to replace the item. Keeping your eyes open for secondhand replacements is helpful as well. Replacing with brand new isn’t always in the budget.
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.
Setting up a financial safety net is something everyone should do. Starting at a young age, right out of high school will ensure that you always have some kind of finances set aside.
Using a percentage of every paycheck, like 10%, and putting it in an emergency savings account can really add up fast. Some companies even offer special savings account where money is pulled out and that way you don’t have it to spend on unneeded items now. It’s there for when you do need it for emergency things.
Recovering After an Emergency
This brings us to a good point. Here’s how to recover quickly after that purchase. Go over your budget (you have one of those, right?) and look if 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 theatre.
Learning about ways to save on your grocery bill and doing more couponing and meal prepping. Even saving $20-$40 a month on these can add up fast. Telling yourself you don’t need all the junk food or quick meal items, or name-brand products.
Use the money you’re not spending on unnecessary items 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.
You might find that just changing up a few things like this will help your savings regrow, and keep growing. And, you might not miss the few little things you gave up to regrow your savings.
Truly Unexpected Expenses
But what do you do when the expense comes up before you had a chance to set up the emergency fund? 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 or a long while. If it’s the fridge or the stove, those are harder to live without so are a must to fix or replace. A furnace or hot water heater is also very needed.
A vehicle is very important depending on where you live. Close to a bus route, take the bus for a while or subway and save money for the repairs or new vehicle. Finding someone to rideshare with can also help. Riding your bicycle to work might also be an option. Asking your job if you can work remotely part-time until your vehicle is fixed or replaced is another option.
If you need a vehicle, 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 vehicle.
Shuffle your money around and if there are no other options charge it to a credit card, if that is an option. Your main goal right now is paying off that expense. If you stick every penny of discretional income in, 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. Because you know something else will break down the road.
How to Plan for Unexpected Expenses Conclusion
When you plan for unexpected expenses you save yourself a lot of stress in the long run. It isn’t that hard to plan, and start a savings account. Don’t get stuck saying “OH I wish I had planned for this” because that doesn’t pay for the expenses.
Basically, it’s not what will break, it’s when. Things aren’t built to last a lifetime so setting up an emergency fund is a huge part of adulthood. Between things breaking, jobs ending, health issues, pets with emergency issues, etc., life just happens. Be prepared for unexpected expenses and stay ahead of the game.