Don’t let life’s little surprises wreck havoc on your budget.
Just when you finally thought you have come up with a monthly budget that you can live with, something unexpected happens and you suddenly find yourself desperately trying to cover an expense you have not planned for. This happens more frequently than some people think. In fact, according to a 2014 survey by American Express, 47% of Americans were hit with unforeseen expenses in the past 12 months. Unfortunately, about 40% do not have enough savings to pay for such expenses.
Some of the most common personal expenses Americans experience but fail to save up for includes car-related expenses, healthcare, and home-related expenses such as maintenance and repairs. Educational expenses and insurance also make it to the top of the list.
Don’t forget to save some money for car-related issues so you would not be taken by surprise when something unexpected comes up. According to the 2013 CarMD Vehicle Health Index,the average repair cost for a car made between 1996 and 2012 amounts to more than $350. As such, you should save at least $250 to $2,500 each year to take care of any car-related expenses. However, if you own an older car, you may need to save more.
To avoid running into a costly trouble, keep your car in top condition. Consider having an oil change every 3,000 miles and stick to your scheduled maintenance. Don’t make your car work so hard. Go carpooling or take the public transportation when you go to work. Walking and biking can also be good – both for you and your car.
No one knows when he or she will get sick. In fact, no one expects it. Unfortunately, these things happen. To avoid being taken in by surprise, you should build an emergency fund and save enough money to fully meet your deductible. However, it would be better if you will have saved a lot more since there may be expenses that are not covered by your insurance.
To reduce your risk of running into such troubles in the first place, adopt a healthier lifestyle, get an annual physical exam, and listen to your doctor’s advice.
Home maintenance and repairs
While you can learn how to take care of minor repairs around the house and forego the need to hire a craftsman, there may be times when you will actually need someone to take care of major repairs, especially if you own an older house. You may also need to buy a replacement for a major appliance when it breaks down. To take care of such unplanned expenses, you should have safely tucked away at least $1,000 to $5,000.