How should we prepare for unplanned expenses?

How should we prepare for unplanned expenses?

Unplanned expenses often come at times when we'd least expect. Throughout our everyday lives, things are always happening. Cars need maintenance, we get sick, something in the house may need to get fixed, etc. There are so many things that can be encountered when it comes to having to spend money we were not prepared to spend.

Due to the fact that these particular situations do come up, it is best to prepare for them in the best way that you can. Preparing for unplanned expenses enables you to be more at ease when having to pay for them. Most of the time, paying for these types of expenses without anything set aside is what causes stress and depending on the amount of the expenses, can cause or increase debt as well.

A way to prepare for unplanned expenses is to start an emergency fund. To start an emergency fund, it is helpful to set aside smaller amounts of money however you choose to do so. I don't think that it is necessary to save for unplanned expenses in the same way that you are saving for other things such as a vacation or a new car. Saving for these types of things are more on the top of your list and is also something that an individual might put more money into saving for. However, being that unplanned expenses are for any emergency in which you may encounter, putting a few dollars towards it at your desired times allows you to eventually accumulate enough to go towards an expense that is emergent.

Written by Janar Milligan, Financial Wellness for College Students Peer Educator, University of Illinois Extension, Spring 2020. Reviewed by Kathy Sweedler, University of Illinois Extension.