Many people budget their money right down to the last penny. Unfortunately, life happens and people can run into unanticipated and unforeseen expenses. Having an emergency fund is the best way to lessen such financial burdens, but a lot of people don’t save as much as they should to cover such incidentals.
A survey in Canada showed that almost four in ten Canadians seldom or never allocate funds for such emergencies. It’s not surprising that 39% also reported their bank accounts are not enough to survive when faced with a financial crisis.
Having surplus cash and planning how to budget your earnings can help you make more informed decisions about your money. It can also help you prepare for any of these unexpected expenses.
What Are Unexpected Expenses?
Knowing what counts as unexpected expenses is the first step to financial literacy and to effectively plan your finances. These may not be part of your current budget, but don’t think of them as your occasional expenses either.
Real unexpected expenses are not only irregular but also unpredictable. These are less common events that come as a total surprise and may throw you off your game in the finances department. They could be any of the following:
Losing your job is a devastating experience. The grief you feel from it is likened to the grief you feel when you lose someone you love. Covering living expenses for several months without a steady paycheck can be hard. It can also be more challenging if you don’t have significant savings to defray such expenses as you search for a new job.
2. Unplanned Travel
There will be times in your life when you need to make unexpected travel plans. A wedding, a funeral, or some other important event that requires you to make a last-minute trip can hurt your budget. Airfare, hotel accommodations, and other incidentals can cost a lot. Unless you’re planning on cutting ties with your family, these unplanned trips are unavoidable.
3. Medical Emergencies
There are predictable health costs that you usually have a budget for and there are those that are totally unexpected. Examples of the latter include treatments for injuries from accidents, surgery for a previously undetected ailment, and medications for a terminal illness. These expenses can add up, particularly when these aren’t covered by the Canada Health Act.
4. Major House and Auto Repairs
Home and car maintenance might be in your budget, but natural disasters that can seriously damage your home usually aren’t. Car accidents can also cost you a lot in repairs. These won’t be a financial burden if you have the insurance policies to cover them, but people rarely have ample coverage to take care of all the costs that come with these repairs.
How To Best Handle Unexpected Expenses?
Unexpected expenses can take a toll on your budget or hamper your savings goals. Without an emergency fund to dip into, how do you handle them? Here are some strategies you can try:
Create An Emergency Budget
Everyone needs to create a budget to manage their money. While many Canadians don’t put money in their emergency account, one survey revealed that 49% of them stick to a budget. This means that creating a budget isn’t really a problem.
When unexpected events occur, reassess your budget and cut back on discretionary spending to make ends meet. Try to live below your means until the financial crisis subsides.
Make Extra Incom
Saving big on a limited budget will take a lot of work, but it’s not impossible. With unforeseen expenses, you need to either decrease your spending or increase your income. If you cannot eliminate unnecessary costs, why not make extra income instead.
To get you started, here are some money-making ideas you can try in Canada:
- Start a blog and get sponsored posts
- Take part in paid survey sites
- Sell your unused stuff or handmade creations online
- Work as a freelance writer or virtual assistant
- Rent out your car or lease out extra space in your home
Apply For Financing
Without enough savings or another source of income, you may need to obtain short-term financing to pay for these unexpected expenses. Fortunately for you, there are various payday loans online in Canada
Most payday loans have a quick and easy application process. You can borrow up to $1500 and get the amount in as little as one hour once you get approved. This is an excellent option if you need fast cash and have no other options on hand for such emergencies.
These strategies can help you pay for unanticipated expenses. It’s essential, however, to take a proactive approach when it comes to such issues.
Start setting aside money in an emergency account so you’re not thrown for a loop when something unexpected happens. The ideal emergency fund should allow you to cover between three and six months’ worth of living expenses. If you can’t swing this right now, you can always start with a smaller amount, as long as you start saving for that unexpected rainy day.