This post is by our regular contributor, Erin.
I don’t think any of us are strangers to unexpected expenses.
It’s Murphy’s Law in action at the worst times: anything that can go wrong, will go wrong, and when you least expect it.
Have you ever been slammed with bill after bill in one month because you weren’t prepared?
Insurance premiums, taxes, inspections, a parking ticket, medical visits – yikes!
I don’t know about you, but I’m envisioning $ signs flying out the window.
The good thing about most unexpected expenses is that, contrary to the name, they can be planned for.
I’m Type A, and if I can plan for something, I will. (Hence my rather large emergency fund.)
You don’t need to go crazy like I do, but consider the list of following “unexpected” expenses you should plan for by way of your emergency fund or separate savings accounts.
1) Medical Costs
About two years ago, one of my wisdom teeth started killing me out of the blue. Unfortunately, I wasn’t covered under dental insurance at the time. I started panicking about how much it would cost to get it extracted.
I tried waiting it out, but in the end, the pain won. You should never have to battle over money or your health, either. It pays to have a little set aside for emergencies like this if you’re not covered under insurance.
I can’t tell you how thankful I was for my emergency fund during that time. The initial estimate had been around $500, but somehow, I didn’t need anything more than local anesthetics. The bill came to around $275. Still, that’s $275 I didn’t have to go into debt for.
2) Your Pets
Pets, while absolutely adorable and very much worth having (in my opinion, anyway), can still be extremely expensive. Especially when something major goes wrong.
Sadly, most of us don’t communicate in dog or cat, and we can’t tell what’s wrong with our pets. Trips to the vet are rarely inexpensive, and the cost of surgery can skyrocket quickly.
If you’re a pet owner, a pet emergency fund (or possibly pet insurance) is an absolute must. Watching your pet suffer is one of the most horrible things to go through, and I saw so many tragic endings during my time working at an animal shelter because of a lack of funds. Please be a responsible pet owner and set money aside for these things.
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3) Technical Difficulties
As young adults, many of us are attached to some form of technology, whether it be our phones, tablets, laptops, or PCs. Unfortunately, that attachment isn’t actually physical. I’ve seen more broken screens than I care to count as things tend to fly out of our pockets, or we misplace them.
Depending upon what you use, replacing a phone or a laptop can run you anywhere from $300 to $1,000 or more. Ouch! Plus, I highly doubt you want to go more than a few days hours without it. (If you’re a freelancer, your computer is pretty much your life, so that’s non-negotiable.)
Having that money set aside allows you to make a (hopefully well-researched) purchase immediately without the stress (or debt).
(Funny side note, my mom actually texted me while I was writing this to let me know their TV just died. It happens!)
4) Car Troubles
My 2002 Civic has been fairly trusty throughout the almost seven years I’ve owned it *knocks on wood*, but there was a period of time just two years ago where it was giving me a panic attack.
I went to start it and something didn’t seem right. As I drove away from my apartment and tried getting onto the highway, it would.not.accelerate.
Thankfully, I lived 2 miles away from my job, so I babied it until I made it to work. Long story short, it could have been a serious engine problem, but it needed a new $50 part and the battery terminals needed a bit of cleaning.
Moral of the story: if you heavily depend on your car to get you to your job, you should have it covered. I have a $20/week transfer set up from my checking to my car savings account in case a random repair is needed again. (Or worse, if it needs to be replaced.)
Oh, and don’t forget car insurance, property tax on your car, regular maintenance (like oil changes), and inspections!
5) Home Maintenance and Repairs
I’m not a homeowner, and to be honest, the unknown cost of repairs kind of scares me! Growing up, my parents lacked savings, so whenever something went wrong, it went on the credit card.
The HVAC unit malfunctioned and died a few times, the washing machine overflowed, the plumbing needed to be fixed, termites invaded, etc.
It was stressful and I didn’t even have to pay (well, I helped out when I was older). Save yourself the worry and bulk up your emergency fund for home repairs.
Take inventory of your home and consider what might need to be replaced in the short and long term. Major/minor appliances, the roof, pipes, plumbing, electric, etc. all need to be factored in.
6) “Hidden” Work-Related Costs
I put hidden in quotation marks because they’re not truly hidden; these are costs we don’t typically think about until we’re in a certain situation.
For example, when I got my first full-time office job out of college, I needed to buy a professional wardrobe. I hadn’t been anticipating that, and I spent at least $300 on various items in one go.
Another example: what if an awesome conference/networking opportunity arises, but has a $400 price tag attached to it?
On a not-so-nice note, some employees are expected to front the cost of travel expenses and get reimbursed from their company later on. Could you handle something like that?
Lastly, worst-case scenario here, what if you’re injured or become ill and need to miss work? Do you have disability insurance? Do you have enough of a cash buffer to go a week or more without paid time off?
7) Replacing Stolen Items
About a year and a half ago, my car was broken into. In this case, nothing was stolen, but I still had to replace the driver’s side window as it was shattered.
There are a lot of expenses associated with theft. Trust me when I say it’s enough to feel violated, you don’t need to feel overwhelmed about replacing stolen items or fixing broken windows/doors.
Make sure you’re covered, whether it’s with insurance or savings. Take inventory of your most expensive possessions, store pictures of them in a safe place, get them appraised, write down the values – do whatever you need to do to make it easier on yourself should things ever get stolen.
8) Gifts for Any Occasion
Lots of people go into debt during the holidays because they didn’t save for the expense over the year. Don’t do that.
Instead, plan out birthdays, anniversaries, holidays, and any other events (is anyone you know getting married or giving birth soon?) that might happen during the year. Figure out how much you want to spend per person/event, and put savings toward gifts each month.
This is a great tip for any of you who tend to forget important events and need to buy a gift at the last second!
9) Insurance Premiums
This definitely isn’t unexpected, but if you pay every 6 months, you might forget when your bill is due. Just as with gifts, total the amount you’ll need to pay for the year, divide it by 12, and save a bit each month so you’re less overwhelmed.
10) Save More as Your Kids Grow
Most parents know they need to keep savings set aside for their kids, but you might want to consider increasing how much you save as they grow (aside from college savings).
Extracurricular activities, travel for sports, theater, ballet, or chorus, school field trips, class dances – they all add up over the years. I know one of the toughest financial years was my senior year in high school.
Our year book, class ring, dances (prom), senior trip, college applications, trips to visit colleges, and graduation attire cost a pretty penny. Take some time at the beginning of each school year to try and anticipate what costs may be headed your way.
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There you have it – 10 instances in which you need to consider adding to your savings. Not all of these will apply to you, but it’s a good list to reference when in doubt!
What unexpected expenses seem to get the best of you? Was there ever a time when an unexpected expense threw you for a loop? How did you handle it?
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Our $1K e-fund served us well during our debt repayment and cover just about all emergencies that popped up, including car troubles a dishwasher blowing up etc. Over time we increased our e-fund, but also added other buckets to our budget to help cover things like monthly doctor visits or medicine, birthday gifts, etc. We found once we got more organized with our budget we had to rely less frequently on our e-fund.
Having kids and two rental homes means something is always popping up over here! I prepare the best I can and keep a stocked emergency fund. That’s about all anyone can do.
Car problems and medical expenses are the worst in my opinion. They both cost so much and I hate the feeling of draining my EF so I try to save separately for big ticket expenses like those.
Kids are the kicker for us. There’s always something that seems to come up, which is why we like to have a substantial EF. We’ve also been dealing with this a lot with my Dad’s passing. It’s crazy the expenses that pop up which is why I’m so thankful we have an emergency fund.
Unexpected expenses are annoying but they don’t really throw me for a loop. Like you…I keep a healthy emergency fund. Recently my car has been an issue, but it’s not really unexpected I guess since I drive so much and it has a lot of miles on it.
This is very timely because I just drove off with my phone on top of the car! Luckily, I was able to find it AND it landed in a snowbank and was uninjured, but I was already thinking about how much it was going to cost for a new phone.
Great list! Sometimes it’s hard to think about future “problems”. We’re all guilty of thinking of them as unexpected, but in reality something is 100% going to come up at some point. So it’s not really unexpected. It’s just when and how much we owe! :(
Eyesonthedollar oh wow! Maybe snow ain’t that bad!!! :)
DebtDiscipline That’s a good observation, Brian! It does pay to be organized with your money, and it gets easier the longer you do it (and can anticipate certain expenses).
holly@clubthrifty.com Yep, that’s why I love mine so much! The peace of mind is worth it.
DebtDiscipline That’s a really good point. For things that are truly not unexpected, it’s great to save for them specifically.
Chonce I
do, too. I’ve got my car savings fund, travel fund, “oh no!” fund, etc.
I like having my money earmarked for certain things as it does make it a
little easier to part with it when the time comes.
FrugalRules I can only imagine how hard it can be to plan around kids! Emergency funds really do take the sting and added worry out of some situations where you just don’t need to be stressed about money on top of everything else.
Andrew LivingRichCheaply That’s definitely one thing I’m a little worried about. Even though I have the money saved, it’s never fun to get a huge repair bill!
Eyesonthedollar Oh no! I’m glad it turned out okay. I’ve known a few people who have done that. Phones are really easy to forget sometimes.
TipYourself Exactly – it’s not unexpected, per se, but it is unknown until it happens. That’s why I like to prepare for the worst in most cases. ;)
I’ve had to deal with several of these types of expenses. From the emergency vet visit when my dog was making weird noises (but was perfectly healthy, thank goodness!) to having to replace my dead laptop during law school finals. Most recently, I’ve been dealing with a rotator cuff injury that’s sent me to various doctors and physical therapy. Although I have health insurance, the copays are kind of high and something I’m not used to having in the budget. It’s so helpful knowing I have savings so I can just worry about my health and not my wallet.
Erin @ Journey to Saving TipYourself Absolutely!
Settle Your Finances Great examples, thanks for sharing them! I’m glad everything turned out okay with your dog. =) I plan on scheduling a few doctor visits soon, and I am not looking forward to the extra expense with the copay. However, I’m grateful I don’t necessarily have to worry about it because I have the money to cover it!
Jaime Donovan Good for you! I love animals, and it’s so hard to say no to adopting a cat or a dog, but if you’re not in a financially sound place, it can be a huge mistake. People don’t think about the costs aside from adoption fees, and they’re in for a rude awakening at the first vet visit when all the shots/vaccinations are due! Not to mention the various things around the house they can destroy. ;)
We have an insurance fund that builds up the $1000 a year we need for the yearly premium. I was tired of getting slammed once a year with a huge bill.
We do have a car fund for repairs and/or to save for a new one. We’re saving money in a pet funds in preparation for an animal, but it’s a pretty small amount. It’s mainly so that we’re used to not touching $27 a month we’ll pay for the wellness plan.
AbigailP Those are both great ideas. I especially like saving so you get used to not having the money since you’ll be transitioning to paying for another bill. Way to do your research beforehand!
Wow, I wish I had thought of many of these things over the years as they have all bitten me at one point or another. Most recently, a car repair bill. I had to dig into my emergency fund of course. Years ago however, I would have juggled something else to pay for it. Excellent tips Erin!
I’ve had car issues a few times. I cracked my windshield in a minor wreck last year. I was thankful for my emergency fund.
Laura Beth @ How To Get Rich Slowly Thanks! Seems like car issues are always a common occurrence, unfortunately. That’s why it’s better to plan for them.
Jason @ The Butler Journal Oh no =/. Cracked windows are not fun to deal with! I was glad the quote for mine was mostly less than what I was expecting.
To expand upon #1 medical – this may not only be for yourself. Unexpected medical expense can also be for when you need support others i.e. paying for the treatment for an ailing parent
Great list of unexpected expenses, people may not notice could get them into debts. Planning for an insurance is the best way to overcome this emergency cases. Loansoluitons.ph offers various insurance plans from different banks form all over Philippines. We back up your financial needs and help you make the smart move.
What about death (or suddenly seriously ill) of out-of-state family member and need to fly home?