Learn How to Plan and Budget for Unexpected Expenses

Read our article to find out how to plan your holiday budget by breaking down typical holiday costs.
Colby Brin
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November 24, 2022
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4
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Unexpected expenses are a part of life. Unwelcome costs can pop up out of nowhere and leave our finances in a pickle if we haven’t planned or budgeted for them. To combat the shock and financial distress unexpected expenses can cause, you can plan for them within your budget.   

To get started, you’ll need to know how to plan and budget for unexpected expenses, what unexpected expenses can include, and real-life examples of unexpected expenses.  

 This guide will cover:

●      What are unexpected expenses?

●     Types of unexpected expenses

●      Plan and budget for unexpected expenses 

What are Unexpected Expenses?

It’s any expense that you were not prepared for. It’s a bill you were not expecting or a cost that occurs out of the blue. Paying for unexpected expenses can strain your budget and cause havoc with your finances. They can happen at any time, usually when you’re least expecting it. 

They can be difficult to plan for because there are many variables, but that should motivate you to save. The more money you have saved, the less impact unexpected expenses will have on your life.  

Types of Unexpected Expenses

Unexpected expenses are just that - unexpected. Budgeting for them is easy, but if you don’t know how to get started, it may help you to understand the types of unexpected expenses you may come across.

The types you may find are:

1. Medical bills

Medical bills can come unexpectedly. If you are in an accident or diagnosed with an illness or medical issue, you may have to pay a medical bill. You may also be unable to work during your recovery, so your income will be affected. You should budget for your unexpected medical bills as well as loss of income. These costs could be ongoing, and you may need to pay for regular prescription medication. 

Although the NHS offers free medical care to English residents, eye tests, dental care, prescriptions, and personal care are not free.  

2. Taxes

You will need to save money to pay taxes as and when they are due if taxes are owed. You may receive a fine if they are not filed on time or are incorrect. If you are a business owner or self-employed, you will need to pay taxes on your income in one lump sum. If you save for this each month, you will have the money ready to pay your taxes when you need to.  

3. Home Appliances

Our home appliances are used so often that we tend not to think about them breaking until it happens. Then the panic sets in as these items are essential to our way of life. These appliances usually need to be replaced immediately, and appliances such as a new refrigerator, oven, or washing machine can be expensive. For example, replacing a new dishwasher can cost between £300 and £500. 

4. Travelling

Things like holidays or weekends away are types of travel that you can plan for, but there are times when travel is unexpected. For example, you may need to travel at short notice to attend a funeral, for work, or to visit friends or family in an emergency. Fuel and train travel costs are rising, so an unplanned trip could take a big chunk out of your finances. 

5. Childcare

Having a child is expensive, and while you’ll have planned the everyday costs into your budget, some unexpected costs can occur. Professional childcare arrangements can be very expensive, and you may need to consider other costs, including:

  • Loss of income if your child is unwell and you cannot work
  • You need to work more, so your childcare costs increase
  • School trips
  • Hobbies 
  • Increased utility bills 
  • A new car to accommodate a larger family 

6. Car Repairs

An example of an unexpected car expense could be taking your car in for an MOT and then discovering it needs costly repairs to make it safe to drive.

 Examples include: 

  • A flat tire
  • Dead battery
  • Cracked windscreen
  • Faulty headlight 
  • Worn brake pads 
  • Suspension issues
  • Broken gearbox

Vehicle repairs can be expensive. The cost of new tyres varies depending on the vehicle, but you could expect to pay £100 for a new tyre and around £400 for a set of four. 

7. Legal Fees

If you get into a situation where you need legal representation, these costs can be very high. Legal fees are very expensive; even if the issue is minor, the legal costs can add up significantly. For example, the average cost of a solicitor in the UK varies between £110 and £300 per hour. 

The pain of dealing with unexpected expenses can be avoided with some organisation, planning and budgeting. You may have used the classic savings jar in the past, but HyperJar has put a modern and digital twist on savings jars, making it easier than ever to grow your savings and keep your money safe.  

Plan and Budget for Unexpected Expenses

A savvy saver should expect the unexpected and plan for unexpected expenses every month. (Try saying that five times fast)

But it’s true. If you plan for unexpected expenses, the impact on your finances won’t be so severe. While it’s impossible to know exactly what the expense will be for or how much it will cost, you can budget for unexpected expenses. Putting away a little money each month to cover them will improve your financial well-being as you won’t have to borrow money to cover these costs. Try the pay yourself first method when planning for unexpected expenses - take a portion of your income and put it in an seperate emergency savings pot before spending the money on anything else. 

Like all savings plans, they should be tailored to your circumstances and include realistic savings goals that consider your income, habits, and lifestyle. 

List possible expenses

The main causes of unexpected expenses detailed above are not the only things you may need to plan for. Here is a list of unexpected expenses that you may have overlooked.  

·   Car repairs due to a car accident 

·   Breakdown costs, such as a call-out charge for a tow vehicle 

·   Home emergencies, such as plumbing or electrical repairs

·   Vet bills

·   Funeral costs

·   Overdraft or credit card fees

·   Parking fines

·   Replacing lost or stolen gadgets  

Budget

To cover any unexpected costs you need to add an extra line for this to your budget. You should set aside a minimum monthly amount to add to your emergency fund. Review your non-essential spending regularly to see where you could save money and put that towards your emergency fund to plan and save for your future. 

Don’t forget to include forgotten expenses in the budget and go through your bank statement to ensure you include all of your costs, so you know where you could save more. By changing a few habits and being aware of your spending, you can easily plan and budget for unexpected expenses. 

Set Money Aside Each month

Saving for unexpected costs doesn’t mean a huge change to your lifestyle. You need to set aside money each month to build an emergency fund. The easiest way to save is by opening up a separate savings account that you can pay into each month. You can set up automated payments that leave your main account each month, so your savings grow without you even noticing. 

HyperJar’s jars are a great option for a savings account, as you can manage everything easily in the app. Our jars are designed to have you saving like a boss in no time.  

No one wants to pay out to replace a flat tyre or a new oven, but it’s a part of life and unexpected expenses will happen. If you plan and budget for unexpected expenses, you’ll be more relaxed knowing you’re covered if the worst should happen. Start planning and saving for unexpected expenses with HyperJar today.

Colby Brin

Head of Copy

Colby Brin is Head of Copy at HyperJar. With over 17 years of professional writing experience, Colby’s been a journalist, ghostwriter, language consultant, and writing trainer. Having previously served as Head of Copy at Wise, he’s worked in fintech for over six years. A native of New York City, Colby graduated from the University of Michigan, and has lived in London for two years.

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