Unexpected costs have a nasty habit of catching you by surprise, blowing your budget and laying waste to your plans. They can crop up at any time too, like a boiler breaking down in the middle of winter, your dog eating something dodgy, or a roof springing a leak in a storm.
None of us need extra costs to deal with right now either given the current cost-of-living crisis and predictions of further inflation. But sometimes they can’t be avoided, and you’re left with no choice but to pay them and move on. So how can you deal with what life throws your way and get back on track?
Below, read practical tips on dealing with unexpected costs.
Find extra money
First, you need to work out how you’ll cover the unexpected cost in question. Your options include:
- Taking on extra work, e.g. weekend shifts
- Selling your stuff like old clothes or unused tech
- Borrowing money from a family member or friend
- Skipping or delaying a planned expense, like a weekend away or a new coat
The right route for you will depend on things like the urgency of your situation, how much money you need, and the comparative ease of each option.
Plan for common unexpected costs
Next, you’ll want to put yourself in a better position should another cost crop up in the future.
It’s impossible to know exactly when disaster will strike, of course, but some unexpected costs are easier to take precautions against. For example, pet insurance isn’t mandatory in the UK like basic car insurance is – but taking out low-cost cover could be a blessing should your furry friend ever need treatment.
Other smart moves include checking and renewing warranties for white goods and other technological devices.
Create an emergency fund
You can’t plan for all unexpected costs in the same way, of course. But for the kinds of costs that insurance and warranties won’t cover, it’s useful to build up an emergency fund.
This means putting money aside for generic costs like car and home repairs, as well as less common issues like emergency travel. It’s generally advised to create a buffer of at least 3 months’ worth of living expenses to fall back on, which is also helpful if your income drops. If the unexpected cost outweighs your savings however, it may be useful to look into a loan to cover the cost.
Rejig your budget
If you’re struggling to save for both unexpected and planned costs, it might be time to reassess your budget and cut down on unnecessary spending.
Options range from switching insurance or energy providers to getting rid of unused subscriptions and reducing discretionary spends on things like food and clothes. If you’re struggling to know where to start, listing your outgoings individually should help illuminate where you’re overdoing it.
Unfortunately, unexpected costs are often a fact of life. But by getting proactive now, you could limit their impact later down the line.
