The following is a guest post. Enjoy!
Personal finance is something that we all have to manage. You can micromanage your budget and consider every expense that you incur in your normal life, like food, housing, and transportation. Even if you manage these costs down to the last penny, life has a way of getting involved in your perfectly managed budget.
Even businesses have to employ various procedures like AML compliance and Know Your Customer (KYC), to reduce their risk of falling victim to fraud and incurring huge unexpected expenses.
Your car gets damaged, your pet gets sick, or a pipe bursts in your home, say goodbye to your budget when one of these things happens! Unless you have a predisposition to clairvoyance, it is impossible to know when something like this could happen. Fortunately, there are ways that you can prepare yourself so that when these situations come around, you can deal with them in the right way and move on. The easiest way to expect the unexpected is to start an emergency fund. The premise of this is quite simple: put away money that you don’t need that you will use to cover unexpected expenses.
There are also different types of insurance that you can get to protect yourself from huge expenses, like auto or medical insurance. By just being a little more organized and having a plan in place, you will not just only be ready for a rainy day but a perfect storm of unexpected expenses!
Types of Unexpected Expenses
Medical Emergencies
A lot of healthcare costs like medicine, checkups, minor illnesses, etc., are pretty regular costs that you can account for in your budget. However, if your appendix bursts or you are hit by a car, that is a completely different position to be in terms of expenses and health.
In this situation, you first have to cope with the added pain and discomfort that you will feel from your injuries, the stressful journey of being brought to the hospital, and the general stress that this situation brings. The very last thing that you need to be worrying about in that situation is a massive hospital bill that is not affordable. It is well known how exorbitant the medical fees are, especially in the United States.
The easiest way to prevent these expenses is to just not get sick. Simple right? However, people usually don’t have any say when they get sick, especially if the illness is serious enough to warrant a hospital visit. There are choices you can make to reduce your chances of getting sick, like living a healthy lifestyle, exercising, eating right, and not smoking can all drastically reduce your chances of becoming a regular visitor to the hospital.
There are many ways to deal with medical expenses if you have no choice in the matter. You can choose an insurance plan that suits your needs, “catastrophic” healthcare plans usually cover emergency expenses that could end in bankruptcy. Exploring every option is critical to lowering the bill here, and you can always negotiate with the hospital or provider.
Pet Emergencies
This may not apply to everyone, but if you have a pet, you know the feeling of having to bring them to the vet. There can be a number of problems, like if your dog has been hit by a car, or your cat swallowed a rubber band, or if your pet has started having seizures. When you are worried, the cost of the vet might not come into mind, but once the situation is over, you will be hit with the reality of the bill.
It may surprise you to know that pet care is around the same as human care! Pet emergencies can range from $250 to $10,000, depending on the specific situation. Fortunately, a lot of common pet emergencies can be easily avoided by just being conscious of the dangers to your pet. Keeping them away from harmful substances and keeping them on a leash when outside are the easiest ways to prevent injury. Other things like taking them for yearly checkups and spaying female dogs to prevent unwanted pregnancies are further steps that can be taken to ensure their well-being.
Just like all other emergencies, no matter how much you try, you cannot protect them from all danger, and chances are they will get hurt at some point. They could even come down with a serious illness like diabetes or cancer, which you cannot do anything about. Acquiring pet healthcare or insurance is one step that most pet owners take when they first take their new pet home. Pet insurance is much cheaper than human health insurance, but there are limits on what it does cover. A simple alternative to this is to take the money that would usually be spent on the insurance premium and put it into an emergency fund for your pet.
Major Auto Repairs
Most of you will own a car at some stage in your life. There are certain maintenance costs that you will expect to pay every year for the normal running of the car. New tires, a new timing belt, etc., are all things that will wear out after a certain amount of time and can be predicted.
What you cannot predict is engine failure, someone crashing into the side of your car, or any other situation where the cost of repairs will be thousands of dollars. In most countries, having auto insurance is enforced by law, and this will help you with the costs in the event of a crash. However, if you have engine failure or any other mechanical failure, you’re on your own.
A good rule of thumb is to bring your car to a mechanic at least once a year for a service and checkup. If you drive an older car, there are options for mechanical breakdown insurance that are quite affordable. It is also a good idea to find a reliable, affordable, and friendly mechanic because you might be seeing them quite a bit with an older car!
Major Home Repairs
Owning a house is similar to owning a car. There is a certain amount you will expect to pay in maintenance over the course of the year. The 1% rule is a rule of thumb to put aside 1% of the purchase price of the house every year for repairs. There are some years that your house will not need any repairs, but then there will be a year where it seems like the problems are never-ending.
House repairs can range from $500 to $20,000, depending on the scale of repair that is needed. Staying on top of home maintenance is one of the best ways to prevent repairs from becoming bigger and costing more. Keep an eye on the yard as well to ensure water isn’t getting into the foundations and plants are not growing too close to the house.
One way to save on home maintenance is to do the routine things yourself, with a basic set of tools the majority of household tasks can be completed by anyone. Having homeowners insurance is also a way to protect yourself from the bigger expenses, especially ones caused by natural disasters
