How to Handle Unexpected Expenses

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Unexpected expenses can throw a wrench in your financial plans. While you can’t predict exactly when an emergency will happen, you can create a plan to handle these costs with minimal stress. 

Build an emergency fund 

Taping into your emergency fund is the best way to tackle an unexpected expense. Ideally, you should aim to save three to six months of living expenses in your emergency fund. 

If you are struggling to build emergency savings, consider slashing discretionary purchases temporarily. For example, you can cut back on dining out, entertainment or streaming services for a few months while growing your savings. 

When you reach your savings goal, only use it for true emergencies. Don’t give in to the temptation to spend these funds prematurely.  

Prepare your budget for unexpected expenses 

If you are concerned about unanticipated expenses, consider building a buffer in your budget. Each month, you might choose to reserve a particular amount for whatever unexpected costs come your way.  

For example, let’s say that you build a $100 buffer into your budget. One month you might spend that to fix a flat tire and the next to cover emergency medication for your pet. If you don’t run into an emergency, you can funnel those funds toward your emergency fund.  

Tap into alternative funding sources 

When you’re faced with sudden expenses, you might need more time to pull cash together. But you might be able to tap into alternative funding sources. 

While you can put expenses on a credit card, personal loans tend to offer lower interest rates. Regardless of the funding option you choose to pursue, look for loan interest rates and a repayment timeline that fits your budget.  

Also, don’t overlook the possibility of debt management solutions from your lenders. Many service providers and creditors offer payment plans or may be willing to negotiate a lower payment amount or extended payment terms. For example, let’s say you are facing unexpected medical expenses. Many hospitals would be willing to let you pay what you owe monthly.  

Be proactive and communicate with them to find a solution that works for your budget. 

Get a side hustle 

Unexpected bills can put a strain on any budget. If you’re struggling to cover unanticipated expenses with your current income, consider getting a second job or side hustle. Extra income can go a long way toward covering unexpected bills.  

A few ways to boost your income include: 

  • Taking on overtime at work 
  • Working through a side hustle app like Instacart 
  • Picking up a part-time job  

Don’t be afraid to give side hustling a try. Remember, you can choose to work a side gig temporarily. If you are facing a hefty bill, consider sticking with side hustle goals for a few months to cover the cost and rebuild any lost savings. 

Seek financial assistance 

If you’re facing a significant unexpected expense that you can’t handle on your own, don’t be afraid to seek financial assistance. There may be community resources, charitable organizations, or government programs that can provide support during difficult times, such as The National Foundation for Credit Counseling. Research and explore all available options to see if you qualify for any financial assistance. 

Learn from the experience

Unexpected expenses can be a valuable lesson in financial management. Take the opportunity to reflect on the situation and identify ways to better prepare for future unexpected expenses.

Evaluate your spending habits, review your budget, and make adjustments to your financial plan to ensure you’re better equipped to handle unforeseen expenses in the future. 

Written by Sarah Sharkey and Edited by Rose Wheeler

Sarah Sharkey is a personal finance writer who enjoys diving into the details to help readers make savvy financial decisions. She lives in Florida with her husband and dogs. When she’s not writing, she’s outside exploring the coast. You can connect with her on her blog Adventurous Adulting.

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