Nothing throws off your financial groove like an unexpected (or forgotten) expense. It’s a real misstep. But instead of letting this twist throw your financial dance off balance, let’s talk about how to adjust your steps and stay in sync.
Unexpected expenses can range from a mild annoyance to a full-blown disaster—it’s just a matter of scale. If you’re debt-free with 3-6 months of living expenses saved, it’ll take more to shake you up. But if you’re squeaking by paycheck to paycheck, anything unplanned can majorly impact your budget, regardless of income. And it only gets worse if you’re not budgeting at all.
Recently, a thunderstorm knocked out power in my area, and I saw pictures of downed trees on social media. Imagine one of those trees crashing through your roof. What would the next few days, weeks, and months look like for you?
Homeowner’s insurance is a lifesaver, but it’s not an instant fix. You’ll need to assess the damage, file a claim, and possibly cover costs upfront before getting reimbursed. And don’t forget the stress of possibly replacing spoiled food, missing work, and finding temporary housing. This kind of havoc can be overwhelming, especially if you’re not financially prepared.
“If you stay ready, you never have to get ready,” as my mom always says. Few people are ready for a tree to crash through their roof, but some are more prepared than others:
But today, we’re talking about the 56% of Americans who say they don’t have enough savings to handle a $1,000 emergency.
When a crisis hits, it’s easy to let your thoughts spiral into worst-case scenarios. Or worse, shut down completely. But once everyone is safe and the dust settles, it’s time to focus.
Relax your shoulders, unclench your fists, and take a deep breath. Now, grab your favorite note-taking tool and write down everything—every random, swirling thought. Get it all out on paper, then start sorting. Separate what you know, what you need more information on, and what you’re afraid of.
Prioritize your tasks and keep track of who you talk to, what was said, and who’s responsible for what. This will help you see the next right step at any stage in the process.
Let’s stick with the roof problem.
Your first call will likely be to your insurance agent. They’ll guide you on the claims process and how to proceed. Depending on your policy, you may need to get bids from approved contractors, or you might get a check to handle everything yourself.
You have choices in who will work on your house. Ask for recommendations, check out the Better Business Bureau, and read reviews. When getting estimates, don’t just focus on the total cost—ask if they’ve worked with your insurance before, what they require upfront, and whether you can pay in stages. Financing should be a last resort.
Now that you’ve got a plan, it’s time to take action—and that often requires money. No matter where you are on your financial journey, it’s time to divert your plans for a bit and start stacking up cash. If you’ve been budgeting, you have a head start. You know where your money is going and how much you can cut back. Get creative!
Sell Stuff: List old TVs, exercise equipment, and other unnecessary items on FB Marketplace. Consign clothes. Sell so much stuff your kids worry they might be next!
Pause Saving: Temporarily redirect your retirement contributions to your emergency fund. Once the crisis is over, you can refocus on long-term savings. For the love of fuzzy puppies DON’T pull money or take a loan from your retirement accounts unless it is an absolute last resort!
Cut Back: Pay only the minimums on debts. Stretch out time between haircuts. Challenge yourself to see how little you can spend on groceries.
Do the Hustle: Consider increasing your work hours, taking on a second job, or joining the gig economy for flexible income. Even donating plasma can be a valid option.
Get Help: If the emergency is pushing you to the edge, look into local food banks, churches, or other assistance programs. The United Way is a good resource for finding help in your area.
The goal is to resolve your emergency without going into debt. If financing is the only option, make sure you understand the long-term impact.
One of the biggest challenges of dealing with an emergency is that it’s your emergency. Sometimes, it takes an outside perspective to see the best course of action.
A financial coach can help you navigate these unexpected expenses without derailing your financial plans. We offer budgeting support, personalized advice, and ongoing accountability to help you get through the crisis and onto a path of financial security.
If you’re reading this before something bad happens, learn from others’ mistakes. Don’t wait to build a safety net. If you’re in the thick of it, I’m sorry—it stinks. But now’s the time to turn your stress and heartache into a determination never to be caught off guard again.
An emergency fund is crucial. Even $1,000 can buffer you from the world’s little surprises, like a flat tire or a dead alternator. And while $1,000 isn’t enough for a major crisis, it’s better than nothing and gives you some wiggle room.
Of course, the ideal is 3-6 months of living expenses in a savings account. This isn’t just a one-time task; regularly reviewing your financial goals and plans will help you stay resilient.
We’ve explored how a big emergency can change your life if you don’t have a fully funded emergency savings account. Now, imagine if you had 3-6 months of living expenses saved up. How different would the situation be?
For example, three months of living expenses for my family is $16,000. According to a recent Forbes article, a roof replacement costs about $11,500. We could cover the cost and move into an extended-stay hotel with our pets during the repairs. It would be a hassle, but life would go on with minimal impact once we refilled our emergency fund.
If you haven’t started yet, I urge you to sit down TODAY with your spouse, partner, or accountability buddy, and make a budget. Get $1,000 together as a buffer, aggressively pay off non-mortgage debt, and build that 3-6 month emergency fund. This will give you the safety net to live a life of freedom and security.
Not sure how to get started? Click here to schedule a free consultation with Altitude Financial Coaching. Let’s plan for emergencies before they happen!
