It may seem counterintuitive to plan for unexpected expenses given. After all, that would make them expected, wouldn’t it?
However, saving money or having an emergency fund for all the things that could happen is a really wise money decision. With a little foresight and a bit of budgeting, you can take some of the stressful shocks out of the seven surprise expenses listed below.
1. Car Expenses
Your automobile requires constant financing from gas to insurance. You expect to pay for these, but then there are the other unforeseen issues, which can range from fender benders to replacing batteries. As cars are a necessity in your daily life, going without one is not typically an option.
Try an existing savings challenge or make up your own that is auto-expense-specific. For example, every time you get gas, move $10 from your checking account into a separate savings account you have set up just for your car. If you get gas twice a week, you would have saved $1,040 at the end of the year.
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2. Rent or Bill Increases
You have your monthly budget finely tuned when all of a sudden your rent goes up or your electric bill goes sky high. These unexpected expenses can wreak havoc on your bank account and send you into the red more quickly than you thought possible.
With these recurring and often automated bills, sometimes you forget you may have some wiggle room. If a bill goes up unexpectedly, you can call a representative from the company and often be able to negotiate back down to what you were paying.
3. Medical Expenses
There’s no way around it, medical bills are expensive even if you have health insurance. If you are in an accident and require a hospital stay, or develop a chronic condition where you now have the monthly expense of prescription medications, you’re going to need to budget a bit.
Medical expenses will always happen throughout the year, so including them in your unexpected costs file is a good first step. One budgeting trick is to break down your costs into percentages, as in the 50/30/20 rule. This is where you save 20% of your income every month, which leaves 50% for needs and 30% of your income for discretionary spending.
4. Home Repairs
One of the top items in the hierarchy of needs is shelter. So not only do you need to factor in home maintenance, but unexpected home repairs as well. This can mean fixing or replacing anything that goes wrong with the plumbing, electrical or appliances around your home.
For big-ticket items, like household appliances, having some money stored away is helpful. One fun way to do so is the 100-envelope challenge, which is where you can save over $5,000 in 100 days. Simply get 100 empty envelopes and label them one to 100. Then, for 100 days, randomly choose an envelope and whatever number is on the front of the envelope you chose, put that amount of money inside and watch your savings stack up.
5. Pet Medical Emergencies
Furry children are just as much a part of the family as any person, so when they have a medical emergency, you’ll do whatever it takes to pay for them. These vet and medical bills can be
Little savings here and there can go a long way to building a fund for your pet should they need it. For example, canceling unused prescriptions or switching to generic brands can save you lots of money per month. Take those extra savings and start a savings account for your pet.
6. Job Loss
If you lose your job and source of income, it can be a scary prospect to think of how you will pay your bills without taking out personal loans. Or, you are faced with racking up interest rates on your overdue credit card, which can add up to a vicious cycle of debt and plummeting credit score.
Prepare for the worst but hope for the best, so when you do have money coming in, start an emergency fund or savings account. You can even set up automated savings where funds are automatically transferred to this emergency account every paycheck. This way, if you do lose your job, you’ll have a bit of padding to get you by until you’re employed again.
7. Funeral Expenses
The death of a friend or loved one is one of the worst things you can go through. On top of the mourning, many unexpected expenses can come along with it. For example, the funeral is in another state, and you have to cover a $400 plane ticket to get there, or you are the next of kin and need to pay for the funeral itself.
Have a separate spending and savings account. You can just think of this separate savings account as an account you don’t touch unless you absolutely need to, and add money to it on a weekly or monthly basis.
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This article originally appeared on GOBankingRates.com: 7 Surprise Expenses You Should Be Saving for Now
