Unforeseen circumstances can happen at any time and seem to always come with some sort of price tag. From a hike in car insurance premiums to paying for necessary home repairs, there can be a lot that your budget is not prepared to handle. Though unexpected expenses can throw you for a loop, there are things you can do to try and soften the blow your budget will take. Below is a look at some of the most common unexpected expenses along with tips on how to stretch your budget to accommodate them:
Expenses That Sort of Surprise You
There are expenses that you can simply “overlook” like an annual gym membership, and then there are expenses that really catch you by surprise. Those are the expenses that leave you wanting to pull your hair out – or conspire to rob a bank. Below are just a few:
Hike in Car Insurance Costs
If you’re a legally licensed driver in the US you must have adequate insurance for protection. However, there are plenty of factors that could cause it to increase. Your credit history and driving record, however, are the most common factors that can raise insurance premiums. A decline in your credit score could result in higher premiums when you’re ready to renew your insurance.
Likewise, a poor driving record such as habitually driving without insurance, speeding, or driving under the influence can result in you being deemed a high risk driver. You end up in court and the judge tells you that you’re required to obtain SR22 insurance online. This is essentially a document that will be filed by your insurance provider to prove that you have adequate insurance to operate your vehicle. Once you’re labeled high risk, however, this causes your expenses as a driver to go through the roof.
Necessary Car Repairs
As much as you invest in a vehicle, it would be nice if it never broke down on you. The truth is that car repairs are imminent for car owners. While you may be able to successfully budget for routine maintenance like oil changes, tire rotations, and tune-ups, you may not be prepared for a serious repair like a transmission or starter issue. These types of car repairs can run you several hundred if not thousands of dollars literally obliterating your budget.
Housing Repairs
Much like a car your home needs periodic maintenance and repairs to continue to provide safe and decent shelter for you and those who live with you. Unexpected housing repairs are very common – especially for homeowners as you’re responsible for completing the repairs yourself. While there are some basic repairs you could complete on your own, when you’re dealing with issues related to plumbing or electrical for instance, you’ll require the assistance of an expert. Housing repairs in these areas could range from several hundred dollars to several thousand.
Medical Expenses
We all hope to have good health for as long as we live, but that isn’t always the case. Unexpected medical issues can quickly drain your budget. Not only will you have to pay for budgeted copays to visit doctors and other specialists, but you’ll be responsible for paying for medications, treatments, and whatever else may be necessary to get you back in good health.
Taxes
From year to year, you might have a ballpark idea of what you’ll have to pay in taxes. However, if you own a business, earn more income, or have circumstances that place you in a different tax bracket, you can be thrown for a loop by the amount you owe the IRS and stage government.
Tips to Budget for Unexpected Expenses
All of the expenses we described above are necessary but often sneak up on you without notice. Since you don’t want to be caught trying to choose what you’ll sacrifice to afford these expenses, let’s look at a few solutions to prepare financially.
- Create an emergency savings – Start budgeting a small amount of your income to a savings account. Whether it’s $5 a week or $50, it will help in those times when you don’t’ have the extra cash.
- Shop Around – When it comes to things like an increase in car insurance premiums, the best option is to shop around. Whether you’ve been deemed high risk or you have a poor credit history, there are companies out there willing to insure you for a lot less than the competition.
- Keep Up with Maintenance – Preventative measures are always the best way to save money. When it comes to your car and home maintenance, it is a good idea to keep up with the schedule. When you properly maintain your vehicle and home, repairs are far and few in between. If you do need repairs however, it is best to make sure that you use the above advice to shop around for a service provider with the best rates.
There’s no denying that life will sometimes throw you for a loop. When some of the craziest unforeseen circumstances happen in your household, it is important to analyze your finances to and make small changes to manage them. Hopefully this has given you some insight on the expenses to look out for and how you can manage them accordingly.