Saving Up and Planning For Unexpected Expenses

Oct 06, 18 Saving Up and Planning For Unexpected Expenses

“All days are not same. Save for a rainy day. When you don’t work, savings will work for you.”

M.K. Soni

The hurricane season last year left many households in wreck, not just on their properties but also in their finances. The destruction left by the inclement weather forced many people to spend more on unexpected expenses.

Over the past few years, destructive weather disturbances have become common. But while these phenomena are not new nowadays, the sad fact is that only very few American households actually save up for these ‘unexpected’ expenses.

Come to think of it, many of us make budget plans every year (some do it monthly). Some even write their financial plans on creative planners, such as those reviewed at https://getlifeyoudesire.com/. We allot budget for basic necessities, transportation, mortgage, vacation, insurance, etc. But not all of us actually allot money for unexpected expenses. As a result, our finances get drained when these unplanned expenses occur.

Preparing for Sudden Expenses

Aside from storm-related costs, there are many other unanticipated expenses that can arise throughout the year. Emergency home repairs, additional power and heat consumption, car repair bills, annual insurance premiums, sports fees, new membership & subscription fees, medical expenses, and other lump sum expenses. This list can go on and on, as there are endless sudden expenses that you can face.

Saving Up For Unexpected Expenses

Unanticipated expenses can eat up a large sum of your daily budget and even savings. That is why, it is vital that you include it in your annual budget management plan. Here’s how to effectively prepare for these sudden costs.

  1. Identify the common unexpected expenses. Usually, these expenses are seasonal in nature so you can actually foresee them. Some examples of sudden expenses include car repairs, Christmas gifts, car insurance, winter season, dental bills, property taxes, etc.
  2. Review your previous year’s credit card and bank statements. See any irregular expenses or withdrawals. This should help you better identify the sudden expenses you’ve accrued.
  3. Sum up all the amounts paid for unexpected costs that are beyond your monthly paycheck. Divide the sum with your total annual paychecks. So, if you incurred $3,000 for sudden expenses, divide by 24 (if you receive bi-monthly paychecks), then you’ll need to allot $125 for unexpected costs.
  4. Consider it as a recurring expense and pay it up every time you receive your paycheck. For a more organized financial management, you can use the best goal planners that you can find at Get Life You Desire.
  5. Be ready to adjust with your budget and spending habits. You can also start saving small then move up until you reach the target savings. This should help avoid hurting your spending on basic necessities.
  6. Set up electronic transfers that will automatically fund another savings account intended for unexpected expenses. This will help you manage your money better and avoid forgetting your savings.

Once your savings begin to grow, you might be tempted to spend on unnecessary buys. Avoid this itch by thinking of your goals for the savings. Just think that if you spend it now, you’ll end up paying more on debts in case sudden expenses come your way.