Did you know that many Americans live from paycheck to paycheck? Almost 3 in 10 adults in the United States have no emergency savings.
A lot of people have enough money to pay for their rent, bills, and food, but find they have very little left after that. However, sometimes the unexpected happens and you need to cash out money that you didn’t budget for.
Keep reading to discover potential unexpected bills you might need to pay for and how to cover unexpected expenses.
What Are Unplanned Expenses?
Often people budget their finances and work out how much each bill will cost. For instance, if you get paid monthly, you’ll put money aside for your rent, electricity and gas bills, your other bills such as phone and internet, and also for food. Then whatever you have left is your disposable income, which can be spent or saved however you wish.
However, unplanned or unexpected bills refer to money you didn’t plan on spending that month. For example, if you unexpectedly hurt yourself and need medical care, you will be faced with surprised bills from the hospital or your insurance. Other unexpected expenses could include:
- pet emergencies
- auto repairs
- home repairs
Regular car maintenance or an annual eye examination can be planned and budgeted for. Whereas, surprised expenses, like the above, may not be included in your monthly or annual budget because you didn’t expect them to happen.
The costs involved with unexpected expenses may differ, depending on the situation. For example, if you need to undergo emergency medical care this could easily cost up to $20,000, whereas unexpected travel might only cost $50. However, if you don’t have the budget for unexpected costs then any amount of money can seem like a lot.
5 Simple Ways to Pay Expenses
There are always ways you can settle your expenses, so no matter what the cost is, remember to take a breath. Finances can be stressful, but it’s important to look after your health and come up with a logical plan that works best for you. These are some options that you could do to cover unexpected bills:
Dip Into Your Savings
If you do have savings, it’s always a good idea to take some money out to cover unexpected costs. Cash savings, that don’t have withdrawal terms and conditions attached, are always useful to cover unexpected bills. What you take out now to cover your bills, can always be added back in when you save up more money.
Ask Friends or Family
For people who don’t have savings to use, you can always ask your friends or family if you could borrow some money. Often this is a good idea if you don’t need too much money because unlike loans, your friends or family won’t add interest to the money that you borrow.
However, make sure you agree on a set date when you will be able to pay the person back. Borrowing money from your friends or family may cause problems in your relationships, so if you’re worried about this, then don’t borrow money from them.
Reduce Your Outgoings
Another way you can pay for unexpected expenses is by reducing your outgoings. For example, if you spend $300 on food each month, you could try buying cheaper food and making your meals in bulk to save on costs. Alternatively, you could cancel any subscriptions you have as this will help you save money, and then once you’ve paid off your unexpected bills you can restart the subscriptions if you need them.
If you can’t reduce your outgoings, you might want to think about increasing your income. See if your boss has any extra shifts for you, you could try and get another job, or you could try and monetize one of your hobbies such as selling your drawings. There are plenty of ways you can try and increase your income and any extra money you bring in can go towards paying off unexpected bills.
Take Out a Loan
Taking out a loan is another option if you’re short for cash. Personal loans allow you to borrow money with a fixed rate of interest, which you need to pay back over a fixed period. Most personal loans allow you to borrow between $1,000 and $25,000, and all come with different interest rates and repayment options.
Many banks, credit unions, and online lenders make the process easy and offer applications that can be accepted on the same day or the following day. This means that you can reduce your stress and start budgeting your finances to repay the loan.
Have a look at these easy loans online to find a loan to suit your needs. Remember to always look at the small print and work out how long it will take you to pay back a loan before you get one
Put the Expense on Your Credit Card
If you don’t want to take a loan out, then you can always put the expense on your credit card (or if you don’t have one then you can apply for and get a credit card). Credit cards often have quite high-interest rates, some in excess of 20%, so before putting it on a credit card, make sure you’ll be able to pay off the unexpected bill quickly. Otherwise, you’ll end up having to pay a lot of interest on the repayments.
It’s advisable not to put high unexpected bills on your credit card because repaying it may be difficult. Difficulties making the repayment might also affect your credit score and your future ability to borrow money.
Manage Your Unexpected Expenses
Whether you choose to ask a friend, use your savings, or take out a loan, there are plenty of ways you can cover unexpected expenses. Remember to carefully think about your options and research each option before choosing one. The best way to manage unexpected expenses is to keep a calm head and apply logic.
Don’t forget to check out more of our finance, savings, and loan articles to get the best tips and tricks on how you can make your money work for you.