Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Beware of These 5 Unexpected Expenses
Guest Post | March 30, 2023
Image: Pexels/Monstera
Unexpected expenses may be hard to predict, but there’s a good chance you’ll have to deal with a surprise bill or repair eventually. With the odds against you, it’s important you budget for these surprises in advance. Otherwise, the unexpected can be a lot harder to handle.
Budgeting for the Unexpected in Mind
Every budget should cover the basics — rent, food, medical expenses, and bills — but don’t forget about savings. An emergency fund should take a portion of each budget’s cash.
By putting a little bit of money aside for the unexpected each month, you can eventually grow a fund large enough to take on life’s biggest surprises.
For extra security, some people pair their emergency funds with lines of credit. If approved for a line of credit, you may get extra cash on standby as a backup to your savings. You can dip into your line of credit any time your emergency fund falls short of the unexpected.
Armed with an emergency fund and a line of credit, you’ll have a better chance of being prepared for anything — even if you don’t see it coming.
5 Common Unexpected Expenses
Here are five of the biggest, unexpected expenses you need to think about.
1. Car Trouble
All machines break down eventually, including your car. A gasket can blow, your transmission can fail, or you can puncture a tire driving over a sharp bolt. These unexpected issues require repairs if you rely on your vehicle to get you places.
You can use your emergency fund to cover these surprise issues, so you aren’t stuck without a vehicle waiting to gather the funds together.
2. Surge Charges
Sometimes, your regular bills can throw you for a loop. You can accidentally accrue roaming charges on your cell phone bill, or you can use more water than usual if you’re dealing with a significant leak in your plumbing system.
While you should always budget for the usual bills, an emergency fund is there to handle sudden, one-time surges on rates.
3. Medical or Dental Fees
If you don’t have health insurance, unexpected doctor visits, tests, and medication can be hard to handle. Unfortunately, almost everyone gets sick or injures themselves eventually. That’s why an emergency fund or line of credit is critical for your health. You won’t have to wait for medical or dental attention and put your life at risk.
4. Pet Emergencies
Pets are just like people; they can run into health issues, too. Your cat can suffer from an impacted tooth, or your dog can accidentally eat chocolate. Rushing your four-legged family member to the vet is a no-brainer; you would do anything to help them.
Unfortunately, vet care can be just as expensive as human healthcare, so you’ll want an emergency fund to help your pet.
5. Household Repairs
Lastly, your home may need sudden repairs that you can’t predict. Your roof can spring a leak after a long, wet spring, or your water heater may stop working. Affording a roofer or water heater specialist is a lot easier when you have an emergency fund and line of credit at your disposal.
Be Prepared, Even if You Can’t Predict the Future
Unpredictable, yet unavoidable, expenses can happen to anyone, at any time. Factor in monthly savings for your emergency fund to handle these surprises.
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