You know how it goes. You’re doing an awesome job managing your money, and you’re busy high fiving your spouse for being a budgeting rockstar when it happens:
Your car completely breaks.
Smoke from the hood, lights going off, the works! Why oh why do things always break when your budget is so on track?
Unfortunately, the answer to that is it’s life. It’s just how things tend to happen, and because of that, all of us need to expect the unexpected. So, the first rule for dealing with unexpected expenses is to…
You know that you won’t be able to get through the year without house trouble or car trouble. Things tend to crack and break and wear down over time. It might be an expensive fix and it might be an easy fix; you just don’t know until it happens. For all of these little life surprises, having an emergency fund is so important.
I know everyone raves about emergency funds. They’re old news. Yet, the vast majority of people still don’t have one. All you need to do is put aside $100 a month to have $1,200 by the end of the year. That’s enough to cover most major “oops” moments in life. $100 a month is simply trimming your grocery bill, canceling the cable, or eating in two extra nights a week. Take the money you would have spent on that and put it in a high yield savings account that’s a little harder to get to than your regular savings. Then, you can enjoy the peace of mind of having some funds to fall back on when the unexpected happens.
When something goes wrong unexpectedly, it’s so easy to get really stressed and then make the issue your new Facebook status. However, staying calm is one of the best things you can do to avoid wasting money in this type of situation. When we’re stressed, we don’t think clearly. We tend to spend money on the very first option to fix the problem immediately, and this can cost us in the long run.
So, the best thing you can do is take a breather and take the time to call around to get different quotes to fix the issue. For example, don’t just call up a random tow truck company and go with the first quote. It will only take you a few minutes to look through your smart phone to get a few numbers and choose the company that offers the best price. Obviously, extreme emergencies like medical problems will call for immediate action, but for life’s little inconveniences, a few minutes can make the difference between blowing your budget and just using a small bit of your emergency fund to cover the problem.
Ultimately, unexpected money emergencies are just a fact of life. We all have to deal with them, and some years are definitely better than others in terms of money spent on unexpected surprises. Still, anticipating them and taking the time to think them through can save you so much money in the long run and is really the best way of handing unexpected issues.
What was your latest unexpected expense?- Catherine Alford