I hate being taken by surprise. Because I spend a lot of time planning, I’ve found that I’m not nearly as flexible as I’d like to be when it comes to unexpected expenses. The reality is that most of us can actually plan on regular unexpected spending each month.
When you are sorting out your budget you should look at each unexpected expense you’ve had each month for the past year. I bet the amount is often similar each month, if not, at least you can plan for an average even if you don’t know in advance if it going to be a flat tire, a broken window, or an irreparable stain on your favorite blouse.
Having an idea of the average amount you spend each month or year on something that will happen will help you be in a better place when the inevitable happens.
But what about a very large expense? Let’s say your car gets stolen and you only have liability insurance. First cancel your car insurance. Obviously you don’t want to pay for something you no longer use. The second thing you will have to accept is that your life is now different than it was before you had your car stolen and you are in a position to make decisions. Perhaps you can analyze the cost benefit of driving versus public transportation. You can look for car pool options in your area. Or if you must replace your stolen car, you now have an opportunity to find an affordable used car that offers a low cost to maintain and is fuel efficient. If you’ve been living a frugal life for a while, you may have a nest egg you can tap into to cover the entire cost of the vehicle. That’s a much better option than financing.
I may have mentioned this in another post, but let’s marinade on the fact that 16% of Americans spend over $1,000.00 per month on their car payment. That’s bananas. Obviously they are paying for a car they can’t afford. If they could afford it they would not have financed it.
The point is to not rush into a decision that will set you back a $1,000.00 each month. Good used cars are available and a good choice if you can find one that meets your needs. I realize that a new car smells great and feels fancy, but that smell will dissipate and that feeling will be of regret when you are facing a different emergency spend and your bank account is depleted.
Fortunately most often, we have small expenses that we didn’t plan for and that can be annoying. Recently I got together with my daughter and bought her lunch. It wasn’t super expensive, but it was unplanned. We had a delightful time together and I enjoy her company so much I would love to connect on a regular basis, budget be damned. In this instance I had to adjust my grocery spend for the week by $40.00 to cover the expense of our lunch. How on earth can I do this? Simple, we will eat more bean soup this week. I will buy the fruits and vegetables that are on sale, or we will have potato soup this week. If it’s not potato soup it might be roast squash with a savory rice stuffing. It’s not a tragedy, it’s an adjustment. Because I have been living frugally for years, I can adapt easily. But it took years to learn the skill of working within a budget and preparing foods that are affordable, delicious, nutritious and satisfying.
The most annoying thing about small unexpected expenses is how regularly they occur. I honestly believe that you can figure out how much you will have to spend each month for small unexpected expenses by doing the simple task mentioned above. Figure out the average you spend for a year and plan on that amount annually. That way you can set aside a bit of money, hopefully in an investment account so it’s working for you, and then you will have a resource to cover you in a small emergency.
You can’t prepare for everything that will happen in your future, but you can plan for something to happen in your future. For example, as you age, you should know that you will begin to deteriorate physically. This is reality. What can you do? You can eat well and exercise. You can learn from others who have already begun to face the consequences of age. My parents decided to sit in recliners for twenty years. That is not healthy and they had poor health outcomes, for twenty years. I know a lady who is 90 years old. She takes good care of herself and is still really sharp. However she is 90 years old. I learned that when you are 90 and fall - you can break your hip. I learned that when you are 90 and break your hip, you are more likely to fall again and break something else because you lose so much muscle during the recovery process. The person I mentioned has fallen four times in the past year. She broke her hip, then her pelvis, then her knee, and the last time she broke her hand. I learned that I must take physical fitness seriously as I age and work on making sure I have good balance. I can plan to do that; similarly I can plan for a $40.00 lunch on occasion. I can plan to take my car to the mechanic and spend a couple hundred dollars each year. I can reduce my food cost by sacrificing a couple of luxury items in order to offset my $40.00 lunches. I can set aside money for the mechanic, in an investment account.
So can you!
I’ve been creating content on YouTube, I have a play list of all my future self meditations that can be used with my workbook – “Your Future Self Workbook: A Time Travelers Manifestation Workbook for Intentional Well Being”
The other play list I’m creating is from my podcast about frugal living, I’ve coupled the audio with visuals from the over twenty countries I’ve visited since becoming debt free. You can find my new channel here
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