Tuesday

Don’t Surprise Me: Unexpected Expenses and How to Deal with Them


Are you prepared for unexpected expenses? Read on to learn how to deal with them and how to prepare for them in the future.


A Federal Reserve survey revealed that 4 in 10 adult Americans are underequipped to handle a $400 emergency expense.


This makes up 40% of the adult American population.


It’s virtually impossible to have contingencies for all emergencies or to eliminate them 100%. However, there are measures you can put in place to ensure you are well-cushioned against such eventualities.


Unexpected Expenses


Here are some of the common unexpected expenses and how to prepare yourself for them.


  1. Medical Emergency

While you are able to budget for routine checkups and tests, some medical needs are emergencies.


Aside from the physical pain, the apprehension of what your treatment will cost can be quite unnerving.


Without health insurance, an emergency room visit can cost between $150 to $ 3000. If you are admitted, your bill could be upwards of $20,000.


  1. Pet Emergencies

Your pet’s health closely follows yours and that of other family members. When a pet suddenly gets sick or injured, you get the same apprehension waiting for the vet’s bill, as you do with a doctor’.


Pet emergency healthcare can cost almost as much as human ER care. An animal ER visit will cost you $75 to $125. Basic blood tests will set you back $75 to $ 150, and $40- $60 for pain medication.


  1. Major Car Repair Costs

When you own a car, you have a budget of what you will require for regular service and maintenance.


However, it’s not uncommon to get into an accident that badly damages your car. And this could cost you a pretty penny.


For a collision, for example, an average claim to insurers stand at about $3000. Without insurance, this is cash you have to pay out of pocket.


  1. Unplanned Travel

Unplanned travel entails traveling for weddings, graduations, funerals or other occasions that are unplanned for.


Depending on the nature of travel, the costs can include airfare, car rental, accommodation and upkeep costs.


  1. Unexpected Expenses Occurring from House Repairs

For your house, the 1% rule applies. This means saving 1% of your home’s purchase price each year to cover repairs.


However, home repairs can be unpredictable, you can go a year or two with no repair costs, only for several things to break down in the third year.


A new furnace costs between $2500 to $6040 while a roof goes for between $5100 and $9679.


  1. Gift Expenses

No matter how frugal you are, you cannot completely avoid gifting.


Some events that call for gifts include birthdays, weddings, anniversaries, baby showers etc.


Depending on how many events you are invited to in a year, the costs can really add up.


How to Cater for Unexpected Expenses


Unexpected expenses cannot be predicted and therefore they are not easy to plan for. They exclude:


  • Annual medical checks

  • Taxes

  • Car service costs and insurance bills

  • Professional licenses and memberships

  • Seasonal gear, school uniforms, and supplies

These are best included in a running budget


Nonetheless, even with a comprehensive budget, unplanned for expenses will still come your way. Here is how to manage some of the common ones.


Keep Medical Costs Low


There are several things you can do to minimize medical expenses. The first one is taking good care of yourself by eating right and avoiding excessive drinking and cutting out smoking.


medical costs


Still, do not skip your annual health checks as they can let you in on a medical problem before it gets worse and more expensive to treat.


The same goes for your dog’s preventative care. Find out what foods could harm or be hazardous to your dog’s health and avoid them. Similarly, spaying female pets eliminate all birth related bills.


Taking extra care on the whereabouts of your pet can also lower their chances of getting knocked by a car or harmed by bigger animals.


Insurance


Aside from a healthy lifestyle, insurance can cover your bills as they arise and give you the peace of mind. Granted, insurance is not cheap.


Averaging $321 for one person to $833 for a family, the amounts are steep. However, for low-income earners, Obamacare is subsidized and can pay for a percentage of your premium.


Also, you can pick a catastrophic health plan which covers medical emergencies.


Pet health insurance costs much less than human health insurance. These covers go for an average of $153 a month.


Conversely, regularly servicing your car will save you from making major repairs down the road.


For an older car, consider mechanical breakdown insurance. For a new top of the range vehicle, collision insurance can be worth the cost.


Payday Loans


A payday loan is a loan advance to you and is due on your next payday. The premise of the loan is to advance you cash to get you to the next paycheck.


  • An online payday loan allows you:

  • Fast, same day loan approval

  • Access to a loan without collateral

  • A direct deposit of the approved funds

  • A more personalized and confidential experience

  • Access to funds even with a bad credit history

As with other loans, you have to find a good lending partner to advance an online payday loan to you. A good lender will have favorable terms including the interest rate at which you are to pay back.


Emergency Savings Fund


As a rule of thumb, least 20% of your income should go into a savings kitty. An ideal emergency savings fund should be enough to cover all your expenses for six to nine months.


emergency fund


If this seems overwhelming at first, you can start with a kitty to cover you for three months and build upwards from there.


You can also consider getting an extra job or working overtime to help you accumulate the required amount.


This money will cushion you in case of unexpected jobless, illness, an accident or major home, and car repairs.


Once you establish a reasonable kitty, you can save your money in a money market account. This earns you interest as your balance grows, and allows you access to your funds should you need them.


Have a Social Fund


A social fund will cover everything else, from wedding to Christmas gifts to movies with your social circle.


Again, you can buy gift items in bulk when there are sales and keep them for birthdays, showers and Christmases. Buying items in bulk will afford you good discounts and will be cheaper in the long run.


Re-gifting is also allowed.


If you find yourself taking more and more flights for social functions, a travel credit card can earn you points and bonuses, decreasing the total cost of your flights.


Have a Budget


A budget is among the most resourceful tools for financial management.


Here are a few pointers on creating a budget:


  • Work out your total income

  • List out the things to budget for

  • Your budget list should include household expenses, commute or fuel expenses, and other day-to-day expenses

  • Other things to budget for include regular social activities, grooming and childcare expenses.

When working on a budget, the more comprehensive it is, the better it will be in helping you manage your finances.


Spend Wisely


You have probably heard this before; your finances are as healthy as your spending habits.


Remember, the less you spend on a day to day, the more you are able to save up. The larger your savings kitty, the better equipped you will be in handling unexpected expenses.


Do you want to spend less and save more? Visit our blog for the best picks on deals, discounts, and coupons.


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