Life likes to throw us some curveballs, whether or not we have planned for them. That’s often why we find that our budgets don’t exactly reflect the reality of our situations. However, if we build in many more “what-if” scenarios, we find that we can set aside funds for these unexpected “emergencies” that could otherwise throw a wrench in our budgeting efforts. You think that this doesn’t apply to you? See if any of these spontaneous events have already challenged you in the past or have a possibility of occurring in the future. You’ll find that they are universal enough to include into your contingency plans.
Losing your job can be a big hit to your budget as well as your self-confidence. Along with your income, you lose your colleagues, your status within the company, and the ability to provide for yourself and your family if you have one. In today’s times, unemployment is a very real concern to many, and is worth having an emergency fund for, so that you can confidently look for jobs while still maintaining your standard of living. Experts recommend that you have at least 3 months worth of expenses saved to give yourself time to find a replacement without suffering any real financial consequences or going into debt.
- Dental Problems
Tooth troubles seem very small compared to something like a losing a full-time job, however those who have had a root canal in the past can attest that the cost of a small “dental issue” is large if not massive. Put a little money away every month for the proper maintenance of your dental health and have a fund to draw from in the case of a dental problem like a cavity, chipped tooth, or worse. Have dental problems or need answers to dental questions? Consult a dentist about how likely you are to experience certain problems and how much they cost to resolve. This should give you a better idea of how much money to put away monthly for this cause.
Though many workplaces have insurance for medical expenses like physiotherapy services following an injury, or paying for medications during an illness, there are other costs associated with having limited mobility and/or strength. If you are ill, you might spend more on take-out food, as you can’t cook for yourself, childcare if you can’t handle your kids, and house maintenance if you can’t do it at the time. Even with a great insurance plan, injury or illness can send your spending through the roof if you hadn’t otherwise put some money aside for situations like this.
- Major Appliance Issues
As self-sufficient and resilient we think we are, as members of today’s society, we have come to rely on a number of appliances to get things done. Starting from the stove and range, to the water boiler, the furnace, the laundry machine, to the dishwasher, we need these in working condition to keep our lives on schedule. However, the premature death or at least malfunction of such an appliance can cost a pretty penny to fix or replace. Either invest in a great guarantee for each item or else add more money to your emergency fund to cover such unexpected emergencies.
- Family Expansion
If you are living with your partner, an unexpected addition to your family may be in the books for you. Preparing a home for the coming of a baby is a huge expense which pales in the light of the cost of raising a child over the years. Though there is much reward in this life altering change, if you are not ready for it financially, you may find it hard to accept. Plan for things not to go according to plan, and you will stay in the black.
- Unexpected Death in the Family
Death is the one sure thing we have in this life, however the timing is usually something of a surprise. We don’t often think about it, but the cost that follows the unfortunate death of a family member can be quite large, especially if that person had not started putting money away for this cause. Even if the funeral and burial are completely covered, you will have personal expenses like travel, accommodation, childcare, and unpaid time off work to consider. By putting some funds away early on, you will be able to better deal with your grief than if you are also worried about the financial implications that it brings.
Everyone knows that an emergency fund is an important part of the household budget. However, this does not always cover the kinds of unexpected situations that may arise. Therefore, if you want to avoid being in the red, keep your emergency fund healthy and full so that you have some resources to draw from in any of these likely situations.