Budget Money Savings

How to Save for Unexpected Expenses

March 21, 2016
Unexpected expenses can either be a hassle or something you're ready to punch in the face. If you want to punch them in the face, you have to know they are coming. Here's a few unexpected expenses you should prepare for and all the deets on how you can do it.
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Just how unexpected are unexpected expenses, exactly? Click To Tweet

Just how unexpected are unexpected expenses, exactly?

I question this entire idea of unexpected costs because it really doesn’t make sense if you apply some logic to it. Life throws curve balls and this is something we all are aware of. Wouldn’t it be wise to prepare for these events?

According to recent survey results, 62 percent of Americans have less than $1,000 in savings.  So even though we know things will pop-up, we still fail to prepare for them. Then we want to label them as unexpected expenses and lament on how they keep us from getting ahead. Let’s stop that.

Today I want to discuss these inconveniences and help anyone who constantly battles with this lie to come up with solutions that will protect their financial well-being from the so-called unexpected.


Unexpected expenses can either be a hassle or something you're ready to punch in the face. If you want to punch them in the face, you have to know they are coming. Here's a few unexpected expenses you should prepare for and all the deets on how you can do it.


Types of Unexpected Expenses

To get an idea of what you need to save for, we need to determine what some of these unexpected things are that catches us off guard and throw our finances in disarray. Here are a few:

  • Kid field trips
  • Car repairs
  • Sick visits/ Emergency Room Visits
  • Travel expenses due to death of a loved one
  • Parking/Speeding tickets
  • Work social contributions aka “the kitty fund”
  • Middle of the school year school supplies
  • Surgery
  • Broken phone or computer
  • Home maintenance (appliance, electrical, plumbing, air, heat failure etc)
  • Flood, tornado, storm damage
  • Car accidents
  • Unpaid sick day
  • Baby shower or housewarming gifts
  • Higher than normal heat bill
  • Club or membership dues

Some of these are truly unexpected. I mean, if you were going thirty over the speed limit to get to work last week, that speeding ticket which accompanied your heavy foot probably caught you a little off guard. Stuff happens, right?

Or when your baby drools all over your phone (true story) that was already hanging on by a thread and you had to replace it asap?  I knew my phone needed replacement and I was saving for it. However, I wasn’t able to anticipate the little one’s deviant behavior that hastened my need for a replacement.

I get it. Things catch you off guard, but there is no doubt about it, a speeding ticket and knowing you need a new phone are not unexpected. They are things we should prepare for. Let’s say a storm came through and destroyed half of your roof. We know mother nature is unpredictable so we should prepare by saving enough to at least cover the deductible for your home insurance. That’s a responsibility that comes with home ownership.

If you have kids who are in school you know you’ll need to pay school expenses at least once a year. My daughter started kindergarten last fall and how early do you think we began to prepare for those random school field trips, yearbooks, school supplies, and endless PTO donations?  If you guessed a year early, you and I are clearly seeing eye to eye (fist bumps).


How To Prepare For These Expenses

So, this is what you need to do — classify each of the items listed above as an emergency or an upcoming expense. I’ll give a few examples:


  • Car repairs (Car Maintenance fund)
  • Home maintenance (appliance, electrical, plumbing, air, heat failure etc) (Home Maintenance fund)
  • Flood, tornado, storm damage (Emergency or Home Maintenance fund)
  • Car accidents (Car Maintenance fund)
  • Unpaid sick day (Emergency fund)

For each of the scenarios listed above, Mr. Life and a Budget and I would use either our emergency fund, car maintenance fund, or home maintenance fund. We like to separate these because every time something happens to an appliance, we don’t want to use emergency funds that we would need if one of us became disabled or unemployed. It’s all a matter of preference.

Upcoming Expenses

  • Kid field trips (we save in our School Expense Fund)
  • Baby shower or housewarming gifts (Gift Fund)
  • Higher than normal heat bill (Slush Fund)
  • Broken phone or computer (Technology Fund)
  • Work social contributions aka “the kitty fund” (Slush Fund)
  • Middle of the school year school supplies (School Expense Fund)
  • Club or membership dues (Slush fund)

For upcoming expenses like the ones listed above we have a school expense fund, kids birthday fund, gift fund, technology replacement fund, and slush fund. As you can see, some of these funds are very straightforward.

Instead of worrying about how we’re going to pay for kid birthday activities, we simply throw a few extra bucks into our savings bucket to handle that expense when the need arises. The same works for technology.

Since we can’t predict everything else, like someone moving into a new home or parking tickets, we keep a slush fund that’s at our local bank. This account is for any random curve balls that are thrown at us.

If we were to list each of these out, we would have too many savings buckets to keep up with. Instead, we combine all the other stuff into a slush fund. The slush fund is convenient for random expenses where we may need cash immediately and don’t have time to transfer money from our online savings buckets.

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Turn Unexpected Expenses into Expected Expenses

If you want to these unexpected expenses to be less of a surprise, complete the following six action items.

  1. If you don’t have an emergency fund make this your first priority. For more info, read everything you need to know about emergency funds.
  2. Make a list of all of your current expenses. For things you may have forgotten about, find old bank statements and receipts. Use these documents to get a comprehensive view of the things you have spent your money on within the past few months. It doesn’t have to be completely accurate, you just need to have a general idea of how much you’ve been spending and on what.
  3. Using this list, highlight everything you believe you were unprepared for. Basically, if it wasn’t in your normal budget, you should highlight it. Dental visits, unusual prescriptions, subscription fees, etc.
  4. Take a look at everything you’ve highlighted. Does it fall into what you would classify as an emergency or upcoming expense? For example, unexpected plane tickets to see family during a time of bereavement may be considered an emergency.  Supplies for your kid’s unexpected science project would be an upcoming expense.
  5. Anything identified as an emergency, ask yourself if your emergency fund was sufficient to cover it. If it wasn’t you may want to consider increasing your contributions to your emergency fund.
  6. Anything identified as an upcoming expense, ask yourself if you had enough money in your school supply fund, slush fund, etc to cover the expense. If not, you may want to create a fund for those specific expenses or gather up past expenses for the year and get the average cost. Use that average cost as the minimum for your slush fund.


Wrapping Thangs Up

Anticipating unexpected expenses can be a bit tricky, but it is manageable. We are creatures of habit whether we realize it our not. If you examine your expenses over time, you’ll be able to get an accurate picture of your spending habits. Use this information to stay ahead of your expenses and create online savings buckets to help prepare for the expense.


What do you classify as unexpected and how do you prepare for them? 




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Latoya Scott
CFEI/Social Entrepreneur
Latoya Scott is a Certified Financial Education Instructor and personal finance writer with a mission to help millennials learn how to stop living paycheck to paycheck so they can become financially carefree.

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  • Holly@ClubThrifty March 21, 2016 at 10:25 am

    We keep a $200 misc. category in our budget. It tends to be a catch all for unexpected expenses. Anything that gets too expensive (like surprise car repairs) gets funded from our regular emergency fund.

    • Latoya S. March 21, 2016 at 12:30 pm

      Misc categories can be a lifesaver. I love them because it’s less of a headache. If I tried to micromanage every thing (which I once tried) I would go nuts worrying about whether I spent the $15.00 I set aside for health expenses on the school book fair.

  • Emily @ JohnJaneDoe March 21, 2016 at 1:25 pm

    We probably need to separate out our miscellaneous from our discretionary, but right now most things like field trips, gifts, and book fairs get lumped in with the same pot that we use for eating out or entertainment., because that’s what’s going to get cut. We do have a car/house fund, a med expense fund and a clothing fund, but probably need to start getting more specific.

    • Latoya S March 21, 2016 at 11:09 pm

      Definitely create a system that works for you. Some people are able to deal better with the specifics or an itemization.

  • Aliyyah @RichAndHappyBlog March 21, 2016 at 2:17 pm

    I like the idea of turning unexpected expenses into expected expenses. This avoids the need to tap into your emergency fund for things that aren’t truly emergencies. I love your financial strategies! Will definitely be looking out for more.

    • Latoya S March 21, 2016 at 11:14 pm

      Thanks, Aliyyah!

  • Amanda S @ Passionately Simple Life March 22, 2016 at 1:27 am

    The emergency fund is kind of the catch all for many of these situations for us. I do still have envelopes because of working at the restaurant and they help those other categories that provide us an extra cushion such as misc. car expenses.

  • DC @ Young Adult Money March 22, 2016 at 2:00 am

    Keeping track of my income and expenses has had a huge impact on my ability to anticipate expenses. For example I have a car insurance payment every six months. Super easy to forget about. But if I consult my past 1-2 years of monthly expense payments, it becomes a little more predictable.

    • Latoya S March 22, 2016 at 10:17 pm

      Exactly. Knowing your past spending habits or simply reviewing them can help you remember those things that are easy to overlook.

  • Chonce March 22, 2016 at 10:33 pm

    I check in with my regular budget each month to make sure I’m saving and preparing for annual or unexpected expenses. Still, there are so many expenses that I like to have a cash buffer in place in my checking account as another way to prepare.

    • Latoya Scott March 22, 2016 at 10:49 pm

      Fist bumps for the cash buffer. I would seriously loose my mind if I didn’t have one. I commend anyone who can keep up with the various expenses that we spend. I just can’t, makes my head hurt, lol.

  • Catherine Alford March 23, 2016 at 1:20 pm

    I think unexpected expenses are expected in some ways too. After all, that’s what life is and we all know it’s going to throw us some curveballs now and then. We keep an emergency fund and a small buffer in our checking account to help cover things like this when they come up.

    • Latoya March 23, 2016 at 1:36 pm

      It’s amazing how handy that buffer can come in.