How to Plan for Unexpected Expenses

Author: Jennifer Outram, SEO & Digital Marketing Specialist  Big Leap, LLC jen@bigleap.com

When they think of unexpected expenses, most people think of repairs from a car accident, repairs from a leaking roof, or medical bills from an injury. And many people who haven’t experienced these things think that they don’t need to worry about having an emergency fund because frankly, they’re just cautious people. But if you look at your budget and your past expenses, you’ll find that there are always unexpected expenses popping up, even if they aren’t huge like replacing a roof.

Things like gifts, special occasions, school and activity fees, and pet emergencies can all sneak up on you and leave you frantically trying to shift your budget around to cover the cost. To avoid the stress and, worse, having to charge the expense to a credit card, use these tips to plan for unexpected expenses.

Create a $1000 Emergency Fund

Everybody should have an emergency fund to cover unexpected expenses, and $1000 is a good starting point. While this may seem excessive to some, especially the cautious I mentioned above, you can’t control things like the weather, or the diseases or death of family members and friends who live afar. If you find yourself having to miss work and travel for a funeral, this fund can save you financially. If a tree falls on your roof, this fund can help.

It’s important that this fund is not easily accessible so you aren’t tempted to touch it for unnecessary items. Set it up in a secure savings account that can’t be accessed with a debit card or ATM.

Review your previous year’s expenses

Maybe you already have an idea of what’s ahead. Perhaps you live in an area prone to flooding, or severe snowstorms. This can give you an idea of what kind of unplanned expenses may come your way, maybe in the form of snow tires or disaster restoration services. Maybe you realize that four of your family members have birthdays in June and all threw parties that you were expected to attend. You can plan to spend extra money that month on gifts.

Start creating space in your budget for these items. You never really know how much damage or repairs you will need, which is where your emergency fund can kick in if the amount you allotted in your budget for these items is not enough. Set aside money for holidays and birthdays, and a little extra for work parties or other events that will probably pop up.

Expect the worst, or at least that something will come up

It’s best to just kick that “it won’t happen to me” attitude right out of your head, because it can, and it will. You can’t control how other drivers will act, you can’t control if your children’s classmates come to school with strep throat, or if your dog chases and eats a bee and, surprise, is allergic.

At some point, your car will need maintenance. You will get sick. An appliance will require repairs. Make a list for each family member (including pets) or aspect of your life. Some categories can include home repair, car repair, missing work, medical bills, vet bills, etc. Figure out how much you can allot monthly to each category. Then if an emergency comes up in one category but not another, you can dip from the others without having to use the money for bills or groceries.

Fix your credit

Lastly, make sure your credit score and history will work for you if you do need a personal loan or another form of borrowed money to cover a significant unexpected expense. When it rains, it pours (or so they say), so after you’ve used your emergency fund it may be necessary to borrow mother rather than risk getting stranded or worse. So fix your credit to make sure that unexpected expenses don’t set you back more than they have to.

Skip the cart

Shopping carts are big and getting bigger. Seriously. If it’s just a habit to grab a cart when you go shopping, opt for a basket instead. You won’t be able to fit as much and your arm will get tired, so you’ll naturally shop and spend less. This will help you stick to your list and avoid impulse shopping, so skip the cart and reach for a basket or your own arms instead.

These tips can help you gain control of your finances and rein in your spending.

Thomas C. Corley About Thomas C. Corley

Tom Corley understands the difference between being rich and poor: at age nine, his family went from being multi-millionaires to broke in just one night, due to a catastrophic fire that destroyed his Dad's thriving business. For fourteen years they struggled with poverty. There were eleven in Tom's family, and they lived in constant fear of losing their home.

Driven by the desire to unlock the secrets to success and failure, Tom spent five years studying the daily activities of 233 rich people and 128 poor people. He discovered there was an immense difference between the habits of the rich and the poor. During his research he identified over 300 daily activities that separated the “haves” from the “have nots.” Tom decided to write a book to share what he learned. That book, Rich Habits: The Daily Success Habits of Wealthy Individuals (1st Edition), went on to become an Amazon Bestseller in the United States forty times over a three year period. To give you some perspective, in order to be a true Amazon Bestseller in the United States, where you actually receive a specific Bestseller designation from Amazon, you need to be in the top 100 of all books sold by Amazon in the United States in a given day. Rich Habits did that for nearly thirty straight days, rising as high as #7, eclipsing such Bestselling authors such as Stephen Covey, Robert Kiyosaki and J.K. Rowlings. Imagine that - an unknown, first-time, self-published author selling more books than J.K. Rowlings!

Tom now travels the world, sharing his Rich Habits and motivating audiences at industry conferences, corporate events, universities, multi-level marketing group events, and global sales organizations’ presentations and finance conferences. He has even spoken on the same stage with famous entrepreneurs and personal development experts, such as Sir Richard Branson, Robin Sharma, Dr. Daniel Amen, and many others.

Tom has shared his insights on various national and international network, cable, and Internet television programs such as CBS Evening News, NBC News, Yahoo Financially Fit, Money.com, India TV, News.com Australia, and a host of others. He has been interviewed on many prestigious nationally syndicated radio shows, including the Dave Ramsey Show, Marketplace Money, and WABC.

Tom has been featured in numerous print magazines—such as Money magazine, Inc. Magazine, SUCCESS Magazine, Entrepreneur magazine, Fast Company magazine, More magazine, Epoca Magazine (Brazil’s largest weekly) and Kiplinger’s Personal Finance magazine—and various online publications, including USA Today, CNN, MSN Money, SUCCESS.com, Inc.com, and the Huffington Post. Tom is a frequent contributor to Business Insider, Credit.com, Bankrate.com and a few other media outlets.

National publicity has garnered international media attention for Tom and his Rich Habits research spanning 23 countries. Broadcast media, online publications, and television throughout Asia, the South Pacific, Europe, the United Kingdom, and Central and South America have shared his powerful message.

In an effort to help parents, grandparents, teachers and adults become success mentors to the younger generation, Tom released his second book, Rich Kids: How to Raise Our Children to be Happy and Successful in Life in 2014. This book was the self-help category winner of the 2015 New York Book Festival and Runner-up in the prestigious 2015 Writer’s Digest Self-Published Book Awards Contest. In 2016 Tom released his third book, Change Your Habits, Change Your Life. This book provides the latest science on habit change as well as more of Tom's unique research on the specific habits that helped transform 177 ordinary individuals into self-made millionaires.

Besides being an author, Tom is also a CPA, CFP, and hold a master’s degree in taxation. As president of Cerefice and Company, CPAs, Tom heads one of the premier financial firms in New Jersey.
 
Phone Number: 732-382-3800 Ext. 103.
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Comments

  1. I agree with you. Excellent tips! It’s always better to be safe than sorry when it comes to saving, so it’s important to put money aside and save for things like emergencies and future expenses in whichever way works best for you. Thanks so much for sharing your advice on building a good financial foundation!

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