What is an Unexpected Expense?
Sudden expenses, like major medical bills or expensive home repairs, can throw you off track, derailing your monthly budget or sidelining major goals. A little preparation, including dedicated savings, can go a long way.
Dealing with unplanned expenses can be frustrating, but there are many ways to manage them effectively.
When running a business, sometimes you face unexpected expenses. In this blog, you will explore how a personal loan helps you handle these situations, allowing you to maintain a healthy cash flow and keep your business on track. This blog will explore how you can handle unexpected money effectively without stress.
Unexpected Expenses Examples
Some unexpected expenses include medical bills, home improvement, car repair, home appliance repair, taxes, legal fees, travel, pet emergencies, family emergencies, etc.
Start an emergency fund
An emergency fund can help you stay above water when unexpected events require cash outside of your monthly budget.
There’s no universal benchmark for an emergency fund. But as a general rule, aim to save at least 3 months of your regular expenses.
You don’t have to save this much overnight. The trick, like all savings goals, is to start saving small amounts regularly - comfortable amounts you can manage every month, that can steadily build toward your goal (and start earning interest).
Bright can do this for you automatically. Once you’re connected, set your own savings goal. Bright will learn your spending habits and save the right amount every month, automatically.
Review non-essential spending
To help save more for emergencies, consider shifting some non-essential expenditures to your emergency fund. Take a look at your spending. Is there anything you could do without - temporarily, at least, while you build your emergency fund.
Short-term sacrifices can pay off later, when you’re ready for an emergency with enough in the bank.
Consider a personal loan
A low-interest personal loan can help pay unexpected bills. Before you take one on, make sure you can afford the monthly payments, in addition to your other ongoing debts. Also plan to pay back the loan as quickly as possible to avoid racking up interest charges.
Make extra money
If you’re already on a tight budget and are unable to cut more costs, look for temporary ways to earn money to help build your emergency fund.
Some ways to make some quick bucks:
- Sell an appliance or household items that you no longer need or can do without.
- Ask your boss if you can pick up some extra hours at your workplace.
- Find seasonal jobs to take on after your regular work hours.
- Pick up a part-time work-from-home job.
- Share your professional knowledge with others through mentoring, tutoring or consulting individuals or upcoming businesses that could benefit from your experience.
Check your insurance
Health, property and fire insurance are a few common safeguards against emergencies. Start with a quick review of your health insurance and make sure you can cover the deductible and copays. That’s a good place to start when planning your emergency fund. Consider shopping for policies with better premiums and payoffs.
Life is full of uncertainties. Make sure you prepare in ways that make sense for you.
Use Bright to build an emergency fund
If you're having trouble saving, Bright can help build an emergency fund automatically.
The bright plan helps you to personalize your plan to become debt-free. You can put all your cards and bills in one place. It is an AI-based tool, that allows you to become debt free in less than $10.
You can set your own goals and add your own targeted funds, from an emergency fund to special personal funds focused on your next milestones, like a car a vacation, or buying a house.
If you don't have it yet, download the Bright app from the App Store or Google Play. Connect your bank, set your own goals, and then let Bright get to work.
FAQs
1. How can I prepare for unexpected expenses?
Start saving a portion of your income regularly to help you in emergencies. Try to save at least three months to six months of living expenses. Having an emergency fund provides a financial solution and does not need to take a high-interest rate loan.
2. What should I do when faced with an unexpected expense?
When you face unexpected expenses, staying calm and finding a solution to resolve this problem is essential. If it is a minor expense then use your emergency savings. For larger expenses, explore alternative financing options such as personal loans, credit cards with lower interest rates, etc.
3. How do unexpected expenses impact my financial health?
Unexpected expenses can significantly impact your finances, potentially leading to debt if not managed properly, and affecting your savings. This underscores the importance of managing them wisely.
Suggested Readings
How to Manage Multiple Loan Debts Efficiently?
Considering Debt Consolidation? Here are the Pros and Cons
https://www.huntington.com/learn/budgeting/unexpected-expenses
