Unexpected expenses crop up more often than anticipated and can throw off your financial balancing act. It is important you set up an emergency fund and establish financial techniques that will help you prepare for unforeseen costs. Here is a list of six common, unexpected expenses and strategies to help you prepare for each expense:
Unexpected mechanical car failures can stall the progress of your financial goals. Keep your finances stable and protect your savings with an extended car warranty, especially if you own a used car. Many companies offer extended warranties that protect customers when their vehicle’s factory warranties expire and repair costs rise. You can often choose from several levels of protection, generally based on your vehicle’s mileage and age.
Medical expenses can quickly sky rocket when there is an accident that results in an injury or when you require a procedure that isn’t completely covered by your insurance. Avoid these debilitating costs of care by visiting your medical and dental practitioners often for preventative care. The quicker you react to medical issues, the more likely you are to require preventable, expensive procedures. Also, frequently assess your insurance plans and consider how you could increase both your payments and coverage to avoid major emergency medical costs. The investment you make now could save you a massive financial blow later.
Seasonal Home Costs
Regular home repairs and seasonal wear can drive up your bill for home maintenance. According to the US Department of Energy, families spend at least $2,200 per year on energy bills. In the winter, the cost of heat, propane and power will go up and general winter repairs are necessary to maintain the state of your home. Save up for the higher utility bills in the months prior, so you can easily handle the increased costs. Take time to assess your home’s plumbing to avoid freezing pipes and flooding, and consider thrifty ways you can save on heating by using timers on your central heating, opening curtains for solar heat, and installing extra insulation in your loft.
Gifts and Special Occasions
Gifts and special occasions could easily become unexpected expenses that take a substantial chunk out of your savings when they aren’t anticipated. Plan for these expenses ahead of time by reviewing previous bank statements and record how much money you generally spend throughout the year on these costs. Create a tight budget that will help you plan for these expenses and keep you from dipping into your savings. You can still create special moments for the ones you love without breaking the bank.
If you have kids, extracurricular activities and sports always have extra costs that seem to pop up without much notice. For example, your child’s team may require players to purchase new jerseys and sports equipment, and could also offer team gear for order. Additionally, if you’re teen athlete participates in faraway tournaments, there is the potential cost of transportation, lodging and eating out. Plan for these expenses by talking with parents who also plan to enroll their kids in activities who may have insight about unexpected costs. You could also reach out to the coaches months in advance, who can give you an overview of the unnoted, financial requirements of the activities. Utilize online resources and reports for sports costs, like Time Magazine’s article that lists the general costs for specific sports.
Personal expenses like haircuts, toiletries, and clothes can easily add up, especially if you have a family that requires all these necessities. These are costs that you can budget for annually to avoid consistent spending and a surprising depletion of your checking account. For example, at the beginning of the school year, have your kids shop for clothes that can serve them for the entire year. Provide each kid with a budget and a list of the necessary clothing items they must purchase. In addition to the beginning of the year clothes shopping, have some money set aside for winter wear, like boots, heavy coats and rain gear. Prep for your own personal care costs, like haircuts, by anticipating the frequency of your salon visits. Plan out, for the year, when you’ll be visiting the salon and the cost of the service you’ll receive. By looking ahead and fully preparing for these small, expenses, you can maintain a strong budget.
Avoid smashing your piggy bank for unforeseen costs through strategic, proactive measures and smart budgeting. When you conduct research on the average costs and likelihood of unexpected financial burdens, you can take a more informed approach to establish your emergency fund.
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