If you spend your whole paycheck each time you get it, you might find yourself in a bind if one of life’s little emergencies crops up.
Money expert Clark Howard recommends that everyone have an “oops” fund for unexpected expenses. In this article, I’ll list seven unexpected expenses that can bust your budget and share Clark’s advice on preventing that,
Unexpected Expenses You Should Plan For
If any of these unfortunate events happen to you, you might have to pay — quickly — to get them fixed. Even if you make an insurance claim, you’ll almost always have to pay a deductible.
Let’s take a look at some things that could happen to anyone and how much those things could cost you out of pocket. Note: The prices listed below are for illustrative purposes only and will vary based on many factors including where you live.
7 Small Emergencies That Can Break Your Budget
|Pet Surgery (Cat)||$1,500 to $3,000|
|Cracked Car Windshield||$185 to 1,000|
|Water Heater Repair||$244 to $576|
|Child Care (one week)||$201 to $565|
|Cell Phone Screen Replacement||$70 to $300|
Of course, there are many more. But as you can see, unexpected expenses, even the kind that happen all the time, can add up quickly. So how can you make sure you’re prepared?
Clark’s Solution: Build an ‘Oops’ Fund
When it comes to dealing with unexpected expenses, Clark says the key is to practice something we should be doing anyway: saving.
“If you don’t have savings then you’re not prepared for the ‘oops’ in life,” Clark says. “Because oops happen — all different types and sizes — and a lot of times we’re not in a position to deal with them.”
Clark says the numbers show that if you’re not saving, the risk of financial difficulty is much higher.
“Surveys show, no matter how the question is asked, that roughly half of Americans cannot handle a simple financial hiccup in their lives — some part of our car breaks, or something in your home needs repairing or replacing or whatever it is that’s a surprise,” he says.
“That’s why having savings in an oops fund or emergency fund is so important.”
You may be wondering how to go about building an oops fund. Here’s what you need to know about creating an emergency fund.