Managing Unexpected Expenses

Hurricane Helene left a path of destruction some 800 miles long. In the wake of the aftermath, many Americans are faced with unexpected expenses. These expenses include damages to property due to wind and water, temporary lodging costs for those displaced out of their homes, transportation costs to relocate from flooded areas, and food costs while recovering from the flooding. Unexpected expenses, like those brought about by Hurricane Helene, are contributing to budget constraints, changes to daily routines, and emotional distress. While natural disasters can catch us all by surprise, there are steps that can be taken to prepare and manage these and other unexpected expenses.

Emergency Fund

Building an emergency fund can help. Discipline yourself to set aside a pre-determined sum of money each pay period into a separate bank account to keep it from getting comingled with funds that are used for routine expenses. Start small and build up the emergency fund balance over time with the goal of reaching an amount that will cover three to six months’ worth of household expenses. Use of an emergency fund will enable you to avoid high-interest debt that would otherwise result from using credit cards or taking out a personal loan to cover unexpected expenses.

Expense Reduction

Take inventory of non-essential expenses and make cuts where you can-look for unused subscriptions, reduce dining-out experiences, and buy quality off-brand products instead of name brand goods. De-clutter your house by selling stuff no longer used or needed. Begin with just a little bit of decluttering daily, and focus on one room at a time. Selling unwanted and unused items will not only help you gain space and clear your mind, but will also generate cash that can be used to cover unexpected expenses.

Insurance Coverage

Regular review of insurance policies - auto, home, and health - will enable you to make adjustments as your household changes, and will ensure that coverage will be adequate when it is needed. Seek supplemental coverage - additional health insurance, life insurance, and disability insurance - if needed for your family circumstances. Supplemental policies are designed to complement regular insurance coverage and can save the insured against unexpected expenses. If you have pets, pet insurance can help protect your pet from accidents, injuries, and illnesses.

Contingency Planning

Historic and modern day natural disasters have taught us much about planning for the unexpected along with how to deal with the unforeseen. When priorities are competing, it can be hard to decipher what is important. Therefore, if you haven’t yet implemented a strategy to help you minimize financial loss or revisited your emergency fund balance recently, perhaps this is your call to action. Financial challenges are inevitable. Being prepared to navigate small financial disruptions can help you achieve financial peace of mind.