In the world of finance, unforeseen events are a constant. No matter how good all your numbers look on paper at the beginning of the month, the reality is likely to be different in practice. For the same reason, none financial education It will be complete if it does not provide you with the appropriate tools to handle the occurrence of unexpected expenses in your daily life.
Whether it’s due to your car breaking down, your pet’s vet, a close family member’s illness, a doctor’s consultation or an emergency repair at your home, unexpected expenses will pop up. However, it is possible to organize your accounts and plan your numbers so that in the end it does not throw the whole budget out of balance.
How can you face unexpected expenses with financial planning?
These tips will be very useful for a good arrangement of numbers so that no emergency situation catches you by surprise:
1. Create a budget
As part of financial planning, it is crucial that you are clear about your income and expenses so that you know how to manage them. The following steps are useful for this:
- Compile your usual income and expenses.
- Separate fixed and variable expenses.
- Prioritize fixed expenses and evaluate whether you can do without some variables.
- Set aside part of your income and save.
2. Prepare an emergency fund
Starting with the last point of the budget, it is recommended that you set aside part of your savings for emergencies and set aside an amount of money that you will be able to touch only in case of unexpected expenses.
Ideally, you should set a base amount and try to maintain it over time. As long as you don’t face too many unexpected expenses, this fund will likely continue to grow. If you decide to use part of this fund for another purpose, it is important that you always stick to the basic amount.
3. Keep your bank accounts under control
If you want to achieve better control over your expenses, it is recommended to consolidate the capital in one account or in one bank, so that you have an overview of all movements and do not miss anything by mistake.
Likewise, be well informed about the different accounts available in the market so that you can choose the most convenient one according to your needs and the benefits they offer. Another great idea is to activate alerts so that you are notified of any movement with your money via mobile banking so that you can quickly detect any anomaly.
4. Don’t put off spending
Facing a costly contingency can be overwhelming and you may not know what to do in the moment. For this reason, many people avoid dealing with expenses immediately and wait for a better time to take charge. They can thus ignore red lights in the car, small disturbances in the home or minor health symptoms.
The problem is that many of these problems, while they may seem small at first, can become much more complex in the long run. In this sense, the sooner you solve these small expenses, the better you can prevent them from turning into bigger expenses or more unpleasant problems in the future.
For all these reasons, forecasting is one of the most important keys to financial education.
Now that you are clear about how you can prepare for contingencies, you financial planning You will become rich and your financial situation will be a solid pillar that will not be affected by unexpected situations and thus avoid unplanned debts.