When you’re dealing with your personal finance, it might seem easy to make a budget for each month. Covering all of your everyday expenses, from food to your mortgage repayments, you will have a good idea of how much your monthly costs will be. However, life isn’t always that easy.
There are certain costs that you will have to deal with throughout the years that come as a surprise to you. From unexpected medical costs to expensive home repairs, you need to know what to do to prepare for such occurrences.
Of course, there’s no way of knowing when disasters like the above will strike. But if you’re prepared for them, the shock of how much they will cost will ease a little. For example, you could create an account that’s specifically for emergencies.
Alternatively, you could invest in insurance which will help to protect you from certain costs – such as healthcare insurance. With a little planning, you will be ready for what life throws your way.
Here are 5 examples of unexpected costs, along with some information about how you can prepare for them.
If you own a car, you can expect that you’ll have to pay for certain things to maintain it over the years. And although costs such as an MOT or service are a given, there are unexpected expenses that will catch you off guard. From having to replace a tire to changing the handbrake, there’s no way of knowing when particular elements will need replacing.
Especially when you’re in an accident. Accident repairs can cost you thousands of dollars – especially when you’ve collided with another vehicle and you don’t have any insurance. Which is why it’s important to try and avoid these large expenses.
How? Well, a simple way of avoiding these types of costs is by driving your vehicle less. If you want to delay the need for any major repairs, opt for biking or walking – whether it’s to work or to do errands. This will also help you to save money that you would have spent on gas.
From the get-go, you should also invest in car insurance. Although this can seem expensive, it will lessen the overall costs of any unexpected repairs you need to be done – in the case of an accident or otherwise.
Of course, neither of these suggestions will help you to predict when an accident occurs. The best way to prepare for this is to try and be a safe driver. Be aware of what’s happening around you at all times, avoid any distractions and stick to the speed limit no matter where you are.
Certain healthcare costs – such as the cost of medicine and check-ups you can budget for. But if you find yourself in an emergency situation, there’s no way of knowing how much it will cost you – especially if you don’t have insurance.
In a situation like this, you will have to deal with the stress of knowing that your life could change, as well as the pain associated with it. The last thing you need when you’re in an emergency is the thought that you have to pay for a huge bill at the end of it.
In this country, a hospital bill can cost you thousands of dollars when you don’t have health insurance. From the initial cost of an ambulance to any operations and ongoing care costs, you’ll find that you’re rapidly accruing debt. And that’s only when you have a one-time emergency. Major illnesses, such as cancer or a similar terminal illness can require months or years of treatment at extremely high costs.
So how can you prepare for these types of unexpected costs? This is a tricky one. Of course, the obvious answer is to try and stick to healthy lifestyle choices and to regularly visit your doctor to decrease the chance of getting sick in the first place. But if you’re in an accident or you face an illness that you’ve been trying to prevent, that piece of advice simply won’t work.
To prepare for this, you should do two things – ensure that you have healthcare insurance, and as aforementioned, try and save some money each month in an emergency fund account. This will help you in the case of an accident or an unexpected hospital visit.
The unexpected cost of bailing a loved one out can be a bitter pill to swallow – and one that can be difficult to deal with. A cost that’s hard to predict, the immediate expense that comes with getting them out of jail could put your finances at risk. Of course, unlike the other options on this list, this cost isn’t really something that you can plan for – or that many people save money for.
In this case, the best way to deal with the cost is by applying for a bail bond from a company that specializes in them – such as Amistad Bail Bonds, LLC. Although this is something that you do after the fact, it will undoubtedly come in handy. Helping to secure a speedy release for them, it will cover the cost of the bail money. Although this will need to be repaid over time and a down payment is required, it can help you to budget out your costs.
Similarly to your car, a property is guaranteed to cost you a certain amount of money each year. From your mortgage repayments to your bills, it can be easy to budget exactly how much you will have to spend. But what about when an emergency repair is needed?
From a burst pipe to a hole in the roof, certain things can happen to your property no matter where you’re located in the world. And when this type of unexpected cost occurs, it can be hard to find the money to resolve the situation.
In the case of emergency repairs, it’s worth saving a little each month. You don’t want to have to dip into your savings to make these repairs. Which is why you should try and save a little in a separate account in case of an emergency. Setting aside at least 1% of your home’s purchase price each year will help to cover these costs.
As well as saving a little each month, you should try and keep up with any maintenance that’s needed every month. Whether you do this yourself or hire a professional, it will decrease the possibility of emergency repairs. Of course, some unexpected costs can’t be prepared for – such as when poor weather results in a tree falling in your home.
Which is why you should invest in homeowners insurance. Covering damage from natural disasters and certain repairs within the home, you can rest assured that you won’t have a big bill if anything happens.
Usually, travel expenses are expected as you’re planning a vacation that fits your budget. However, sometimes you will have to travel unexpectedly, resulting in some expensive costs. Whether this is due to a loved one’s funeral or another event, it can quickly eat into your savings.
The cost will, of course, depend on where you have to travel to. If it’s nearby, then the cost won’t be a lot. But if you have to catch a long-haul flight, you’ll have to consider the cost of the flight itself along with accommodation, the cost of a rental car, any spending money, etc.
There’s really no way of avoiding the costs associated with last-minute travel. However, there are ways that you can manage the cost so that it’s a little less expensive:
- Try and keep fares low: unless you have to fly, try to avoid this. Consider alternatives that will cost you less – such as driving or catching a train. However, if you have to fly, try and look for the best flight deals – perhaps a flight that’s leaving at midday or late at night.
- Look at alternatives to hotels: hotels can be very expensive, so try and look for an alternative, such as an Airbnb nearby.
- Start A Fund for Traveling: you never know when you might have to book a last-minute trip – but it’s good to keep in mind that this can happen. To help deal with this cost, create a specific savings account especially for this. This way, when something comes up, you will have the money to pay for it – rather than putting the travel costs on your credit card and having to pay for it later.
There are so many unexpected costs that can occur throughout the year. Which is why you want to ensure that you’re in a good place financially to help deal with them. Even if you aren’t in the best-paid job in the world there are ways that you can prepare – and the main one, as you could have guessed from this article is to try and save a little extra money each month.
Another way that you can take from this article is to apply for the appropriate insurance. These two things will help you both in the current and in the future.