No matter how great a budget you make for yourself, there are always going to be some unexpected expenses that sneak up on you. A lot of the time these are unpredictable. Your laptop suddenly refuses to power up. Your car breaks down on the highway. You get hit with a tax bill. But unless you are prepared to deal with these expenses, they can easily end up taking over your budget and leaving you in a very precarious position. So, here are just a few of the best ways of dealing with unexpected expenses.
Have a Backup Plan
There are various backup plans which you can put into place to protect yourself financially. One of the most effective is getting insurance. You can protect everything from the contents of your house to aspects of your personal health like Humana dental insurance plans. What you choose to cover is really up to you, but make sure that you compare your insurance options so that you get the best deal and cover. And it is also worth checking whether you may be automatically covered under warranty. You can also create other types of backup plans. For example, if your laptop were to go wrong, do you have an old one that you can dig out? If your car breaks down, do you know the public transportation options that are available to you.
Build an Emergency Fund
Your emergency fund is what you will tap into should anything go wrong which leaves you out of pocket. Ideally, you should be aiming to have between three and six months worth of living expenses. This way, if you were to suddenly lose your job, you have a bit of breathing space before you absolutely need to find a new one. Once you make a withdrawal from your emergency fund, you need to make a priority of replenishing it once again.
Forego a Planned Purchase
When a financial emergency suddenly springs up, it may be that you need to forego a purchase which you had originally planned to make. Essentially, it is a case of prioritising. Perhaps you have an old laptop that is in need of replacing, but if your boiler suddenly goes wrong, your computer may have to take a backseat.
Look into Income Diversification
If you only have a single source of income, you are putting yourself in a much more unstable position. So, it is worth exploring the other options available to you. Maybe you could look into doing some freelancing work on the side. Perhaps you could look into entering the sharing economy by renting out a spare room or selling some of your things online. Thanks to the internet, it is easier than ever to diversify your income, so this is something which is certainly worth taking advantage of.
There is no doubt that unexpected expenses can hit hard, but these are just a few of the ways that you can put yourself in a better position to deal with them.