How to Handle Unexpected Expenses

A common reason excuse people give for not budgeting, is that unexpected expenses always come up which prevent them from following the budget.

Anyone that has budgeted has experienced that — and it IS frustrating, especially if you do a zero-based budget.

You’ve done the work of figuring out all your expenses for the month ahead of time. You know how you’re going to spend every single dollar of your income. The month begins, you go about your business, and then BAM! You realize you have to pay for your kid’s sports registration in a few weeks, AND the car is due for maintenance, AND you have a baby shower coming up.

We’re not talking about emergencies; we’re talking about everyday expenses. It’s enough to make you want to give up on budgeting, but don’t’! With a plan of attack, you can handle these unexpected expenses — and reduce the number of things that “come up” every month.

The Plan of Attack

When an unexpected expense pops up, resist the urge to panic! Handle it by doing the following:

Assess the Expense

The first thing you need to do is assess the unexpected expense. You’ve already completed the budget, so if you’re going to change it, it needs to be for a good reason.

Ask yourself: Is this expense absolutely necessary? Can it wait until next month? Is there an alternative? Do I need to spend x amount on it? Is there a less expensive option? Spending a little time assessing the unexpected expense may reveal that you can address it next month, or perhaps not at all.

Go Back To Your Budget

If you’ve determined that the expense must be taken care of, then you go back to your budget. If you’re not spending more money than you have coming in, then you have to go back to the budget and make some changes.

Look at what other expenses you can put off until next month to accommodate this unexpected expense. You may be tempted to automatically think that nothing can be adjusted, but if you look closely at your budget and review each item you’ve planned for, you may identify something that can wait.

Perhaps you need to shave off a little from one expense and a little from another to squeeze out what you need. Maybe you need to do a combination of delaying some expenses and reducing others.

You may need to reduce the amount of money you are saving this month or the amount of extra money you are putting towards your debt. While that’s not ideal, you accomplish the goal of fitting in the unexpected expense.

Use Your Emergency Fund

Is the expense actually an emergency? As a last resort, use your emergency fund. But be selective here; otherwise, you will slide down the slippery slope of dipping into your emergency fund for matters that are urgent but not important.

Reduce Your Unexpected Expenses

While it may feel like something always comes up, there are ways we can reduce how often an expense surprises us.

Plan Ahead

Yes, things are going to come up, but sometimes when they do, it is just due to our lack of planning. If you think about it, you really do know that your kid’s sports registration is coming up, AND that the car is due for service, AND you have to buy a present for the baby shower — you just didn’t plan for it.

These expenses aren’t so much unexpected as they are unplanned for. When you become aware of an event that is on the horizon, be sure you are thinking about and planning for its related expense.

Keep a Running List of Upcoming Expenses

Throughout the month, keep a running list of expenses that you will need to address in the following month. Every time you think of something jot it down. Your kid got invited to a birthday party? Jot it down. School pictures coming up, jot it down? Field trip? You get the idea.

When you go to do next month’s budget, you will now have a small list of items to incorporate into the budget. You will now PLAN for these unexpected expenses instead of being surprised by them. You can do this by keeping a physical list in your wallet, creating a memo on your phone, or if you use a spreadsheet for your budget, you can keep your list there.

The more you get used to thinking ahead and making a note of what’s coming up, the fewer amount of things will “pop up” throughout the monthly – miraculously.

Say No

Another way to deal with and reduce unexpected expenses is to say no. Of course, some expenses are valid, and you can’t say no to everything, but there will be some things you will need to say no to. We get ourselves in trouble by believing we have to always say yes. Don’t take on an obligation or commit to something if you do not have the money for it. It is okay to say no. I’ll repeat that. It is okay to say no.

Common “Unexpected Expenses”

To help you going forward, here is a list of a few typical expenses that can sometimes surprise us. Add your own items to this list and keep it handy.

• Doctor/Dentist copays or bills
• Prescriptions
• Kids’ expenses: fees/equipment for sports or activities; field trips; school pictures
• PTO Dues / Organization Dues
• Car Maintenance
• Car Registration / Taxes
• Gifts for parties, showers, etc.

Hopefully, these tips will help you going forward. By thinking ahead and having a plan, you’ll be able to minimize the number of unexpected expenses that come your way and handle the ones that do — like a boss!