How to Budget for Unplanned Expenses


You’ve finally mastered your monthly budget, but an unexpected expense comes up and throws you a curve ball. Occasional unexpected expenses can throw even the most experienced “budgeter” for a loop if not prepared. 

How can you make sure that you’re prepared for whatever expense comes your way? Here are a few ideas:

Open Separate Accounts.Set aside money just for one-off expenses. In your budget, include a set amount of money that will go towards your “just in case” or “rainy day” fund each month. Credit Unions often offer maintenance-fee-free savings and checking accounts, so opening another account to be better organized and prepared won’t cost you a thing. You can even open multiple savings accounts for specific events. Consider a vacation fund, home repair fund, or whatever type of expense you anticipate. When the time comes that you have an unexpected bill, you’ll know exactly where to go without busting your budget, or even touching it.

Plan Ahead. A lot of expenses, like car repairs or a surprise trip to the vet, are unexpected expenses that you cannot possible anticipate. Other expenses, however, such as birthdays, Christmas, vehicle registrations, and property taxes are annual costs that you know are coming. Estimate how much your bills will be for each event, and adjust your monthly budget accordingly to save a small amount into the account dedicated to that expense.

Get Ahead. Save up money every month so that you have extra cash sitting in your checking account. When unexpected expenses come up, you’ll have the extra money available right when you need it. The most important thing here is to remember not to spend this money accidentally just because you have “extra” money in your account.

Be Smart About Extra Income. Are you getting a bonus at work? Getting a tax refund? Cashing in on credit card reward points? While your first instinct may be to spoil yourself with the “free” money you just received, consider a compromise. Use 15% of your additional income to spoil yourself. Stick the additional income into your “just in case” fund to painlessly save for unexpected expenses. Treating yourself and saving will feel rewarding and you’ll sleep well at night knowing you’re better prepared for the unexpected.

These are just a few of many ideas on how you can prepare for unexpected expenses, but they can help you hit a home run with your budgeting!