Unexpected expenses are an unfortunate fact of life. Whether it’s a medical bill, car repair, vet bill, etc., an unplanned cost can throw your financial plan off track. When it comes to personal finance, it’s best to expect the unexpected. After all, you don’t want to be stuck between paying regular and unexpected bills. Here are five tips to help plan for unexpected expenses.
The best way to plan for unexpected expenses is by budgeting. After all, you can’t manage an unexpected bill if you don’t have a handle on your regular monthly bills. Many apps like Mint
can help you track your spending
. They can show your income versus spending, which allows you to cut down costs. In addition, they help you figure out how much you need to set aside for things like bills and groceries and how much you can save.
If you don’t want to use an app, you can always go through a month’s bank statements and calculate how much you spend in areas like utility bills, groceries, entertainment, etc. Try to create and stick to a monthly budget, so you always know where your money is going.
2. Create An Emergency Savings
An emergency savings is a fund you use to pay for unexpected expenses. It can be used to pay unexpected bills or cover you and your family in case you lose your source of income. Experts recommend your emergency savings cover at least three months’ expenses
. However, that is a lot of money. It takes planning and accountability to reach your savings goal.
Once you know how much you spend every month, you can figure out how much you can save. Then, automate your savings so that a little bit goes into a savings account every time you get paid. Over time, you’ll see this savings grow and feel more confident about whatever expense life throws you.
3. Invest Your Savings
Investing will allow your money to grow more than a typical bank account. There are many ways to invest. For example, you can choose low-risk Certificates or Money Market accounts offered by most banks or purchase a government bond.
Investing in the stock market is riskier but typically yields higher rewards. Stock market investing does take research and know-how to create a strong portfolio. However, some financial institutions offer automated investment accounts
that use AI to create a portfolio that aligns with your goals. It’ll choose investments for you so you don’t have to worry about it.
4. Build Your Credit
Ideally, you’ll have enough savings to cover an unexpected expense. However, that’s not always the case. Using credit to cover an unplanned cost should be a last resort, but it’s better than not paying it. If an unanticipated cost arises, you’ll need to build your credit.
A good way to do this is to get a credit card and use it for regular expenses like gas and groceries. Then pay it off before the end of the monthly billing cycle. These regular, on-time payments will keep you from paying interest and slowly increase your credit score. In addition, you may save money if you have a cash back or rewards card.
5. Protect Your Devices With An Extended Warranty
Finally, the best way to plan for unexpected expenses is to limit them. Just because you are prepared to cover unplanned costs doesn’t mean you want them to happen. To protect your car and home, you purchase insurance. Similarly, you can buy extended warranties on your devices and appliances to protect them and your wallet.
Most warranties offer one time payments plus a deductible for when you need to make a claim. The warranty company will pay for the repair or replacement of your device for the duration of the plan, typically up to the price of your device. For example, if you buy a 2-year extended warranty for a $1,000 laptop, the plan will cover $1,000 worth of repair for two years. However, every warranty plan is different, so it’s important to read the details carefully.
The Best Warranty Plan is From Upsie
Upsie has affordable and comprehensive warranty plans for most major appliances and devices
. From refrigerators to smartphones, grills to gaming consoles, Upsie has you covered. Depending on the device, customers can choose between two, three, or five-year plans. All plans cost up to 70% less than plans sold by big box retail stores.
Upsie coverage starts immediately after purchase. You can submit a claim any time on any day and one of Upsie’s claims representatives will help you get your device repaired. If a certified repair technician can’t fix your device on the first claim, Upsie will replace it. So don’t get caught needing to unexpectedly pay to repair a laptop or buy a new phone! Instead, save money and protect your devices with Upsie.
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