Your budget helps you cover all of your regular expenses from housing to food to transportation. But no one expects to get hit with a major expense that comes out of the left field. A pipe bursts, a car rear-ends you, or a fever hits harder than you expected, and all of a sudden your budget is out the window.
You can’t predict when a financial disaster like this will strike. But the good news is that you can prepare for them. Consider the following unexpected expenses and what you can do to plan for them.
1. Major Auto Repairs
You can expect to spend a certain amount of money on your car every year to keep it running. You might not know what repairs your vehicle will need, but you can estimate that your car will most likely need an oil change and new tires and you can budget for those costs.
What you can’t plan for is an accident that causes major damage to your vehicle all at once. Up to 6 million car accidents happen on U.S. roads every year with the Fourth of July taking the cake as the worst day of the year for fatal car accidents.
Sometimes Mother Nature has other plans for your car too. Bad weather can cause a massive amount of damage when you least expect it. Take hail, for instance. Depending on where you live, hail might not be too common for you. In 2017, however, there were 6,045 hail storms, causing $1.8 billion in property damages.
Your insurance doesn’t always cover the extent of your damages and this can leave you with a pretty big bill to pay. To better prepare for these unexpected expenses, consider:
- Riding your bike to work or doing errands on foot
- Conducting regular maintenance yourself (if you’re handy with cars)
- Taking your vehicle to the mechanic at least once a year
- Avoiding distractions while driving
- Staying out of heavy traffic
- Taking a defensive driving class
- Keeping your car in your garage or covered area
- Applying for collision coverage
- Filing a personal injury claim
- Investing in mechanical breakdown insurance
2. Major Property Theft
You can set up outdoor lighting systems and home security systems to defend yourself against theft and home invasions. In states like Michigan, home invasions can carry a maximum penalty of up to 20 years in prison. But larceny doesn’t always take place in the home.
Someone can steal your laptop bag right out of your hands on the sidewalk or snatch your wallet while you’re not looking. Thieves breaking into your vehicle can also cause major damage to your car, such as broken windows and damaged locks.
To protect yourself against property theft and to prepare yourself should you be a victim, consider:
- Installing an alarm system on your vehicle
- Keeping valuables in the trunk of your car, never on the seats
- Wearing satchels or bags with long straps rather than clutches
- Investing in warranties and insurance on your electronics
- investing in renter’s insurance
- Investing in home insurance
3. Medical Emergencies
In 2016, the retail medical market was valued at $1.4 billion, so it’s no doubt that Americans spend quite a bit of money in the industry. Some medical expenses are normal to budget for such as minor illnesses, medicines, and checkups. But a major, unexpected medical emergency is a different situation.
Medical emergencies are stressful both physically and financially. The last thing you need once you’ve come home from surgery is a huge bill you can’t afford to pay.
Workplace medical emergencies are a slightly different story. Slips, trips, and falls are some of the most common workplace injuries while injuries caused by forklifts make up 10% of all injuries that happen in warehouses and factories. The most frequent OSHA violation in American workplaces is a lack of proper fall protection.
If you’ve been hurt on the job, notify your employer about your injury and seek medical attention immediately. If the case of your injury isn’t disputed, the cost of your medical service is paid by your employer or your employer’s insurance carrier.
To plan for unexpected expenses related to medical emergencies that aren’t related to your workplace, consider:
- Using your paid-time-off when you get sick
- Using the best health insurance your job offers
- Using walk-in clinics or urgent care centers rather than hospitals
- Using over-the-counter medications and generic drugs
- Negotiating with your healthcare provider
- Getting regular check-ups from your PCP
- Seeking medical treatment for problems before they become major
Unexpected expenses are scary, especially when they completely disrupt your budget or take a chunk out of your bank account. By financially preparing yourself for these situations, you can keep a big expense from hitting too hard.