Everyone has to deal with regular expenses like monthly electricity bills, rent, insurance, utilities, and student loans. Besides that, we also allocate funds for essential groceries and occasional dining out. We set our budget around them.
But what about the expenses that we did not expect? A surprise expense can be anything like damage to your laptop, a sudden accident, or a refrigerator repair. How do you prepare yourself for that?
You should have a safety net where you have enough cash to cover at least 3-6 months of expenses when you face a large unexpected expense.
Let’s learn in detail about unexpected expenses, the types of unexpected expenses, and the proper strategies to handle them better.
What are unexpected expenses?
Unexpected expenses can throw you off track, derail your monthly budgets or make you sideline from your major goals. Dedication with a bit of a saving habit can help you go a long way.
While dealing with unplanned expenses might not be an enjoyable thing, there are several ways that allow you to manage it effectively.
What are the common types of unexpected expenses?
There are numerous unforeseen expenses that have the potential to surprise you. Here are some of the most common categories:
- Household Expenses:
Unexpected costs might pop up, such as sudden electrical or plumbing problems. You might also need to buy urgent appliances like a washing machine or refrigerator.
- Medical Bills:
Accidents or illnesses can lead to unexpected medical costs. Sometimes you need money right away for hospital visits or treatment.
- Car Expenses:
Car problems, accidents, or needing new parts can all result in unexpected expenses for your vehicle.
- Family and other expenses:
A family can have various day-to-day needs. Financial pressure can take place if someone loses their job. There are also unexpected expenses like lump-sump grocery requirements, and family weddings, which can also be inevitable expenses. Families with children also face the burn of school and college tuition fees, which often requires careful financial planning.
- Natural disaster expenses:
Losses due to natural disasters can also be counted as unexpected expenses. You may loose or damage property, your belongings or other expensive important items. You should be prepared for such times also.
How to plan for your unexpected expenses?
It’s smart to expect the unexpected and plan ahead. Here are a few ways you can prepare for unexpected expenses:
- Create an emergency fund
Setting aside even a small amount can give you the much required peace of mind. Keep it in a separate savings account to avoid any kind of temptation. Aim to keep at least three to six months’ worth of living expenses.
- Budgeting
The first step is keeping track of what you earn and spend. Identify the areas with the scope of saving money. Determine the amount you can set aside for emergencies and how much you can cover financial obligations. Once you have a clear picture of where you stand, adjust your budget to fit your needs and goals.
What are the strategies for managing unexpected expenses?
Some of the strategies you can apply when encountering unexpected expenses.
- Take out a personal loan
Consider getting a short-term personal loan from your bank to cover your unexpected expenses. By spreading the expense over several months, you can avoid paying the whole amount upfront. It’s best to review the loan agreement carefully, especially the fees and interest rates.
- Prioritise expenses
Prioritize your spending when you are facing unexpected expenses. It is best to focus on essentials like food, shelter, and other utilities and postpone non-essential purchases for the time being.
- Generate additional income
Boost your income by freelancing, taking on a part-time job, or selling items you no longer use.
- Seek financial assistance
When you are struggling to cover unexpected expenses, reach out to your friends, family, or community groups for financial support.
Conclusion
It is not practically possible to stay prepared for expenses for which are not on your regular list. But they should be a part of your financial planning. Some ways you can manage these unexpected financial storms are by having an emergency fund by your side, having a calculated budget for it, using your credit in a strategic way, or the best is by considering taking a personal loan to manage them. Personals loans are convenient and budget-friendly options which can help you sail smoothly through unanticipated financial crises. Besides, trusted lending apps can be your best chance for immediate financial assistance with unexpected expenses.
