Everyone gets hit with unexpected expenses from time to time — those surprise costs that can upend our monthly finances. It’s a tough problem to deal with; after all, how can you plan for a risk that often comes without warning?

None of us can predict the future, of course, but it pays to be prepared for the what-ifs. That’s because the reality of not planning for the unexpected is a surefire way of guaranteeing even more unanticipated expenses. To gain perspective, it’s helpful to identify the types of money risks that might come your way, along with tactics to successfully plan for them.

What’s the Likelihood of Having an Unexpected Expense?

Unexpected expenses can happen for many reasons. Whether it’s a car repair or replacing a broken appliance, any surprise cost can put a dent in the budget — or even cause a financial setback. And while they may happen out of the blue, they’re also common occurrences.

The likelihood of having an unforeseen expense is tricky to measure, but on average, a third of American households say they expect to need $2,000 for an unexpected expense in the next month, according to a consumer survey fielded every four months by the Federal Reserve Bank of New York.

What’s more, research by Elevate’s Center for the New Middle Class and SpringFour finds that four in 10 consumers experienced an unexpected expense in the last three months that disrupted their family finances.

What Are Examples of Unexpected Expenses?

When trying to cushion the blow of unanticipated costs, it can be helpful to understand what an unexpected expense is and what it isn’t. So, you’ll want to distinguish between the predictable and the unpredictable. Here are some ways to look at the differences.

Expected expenses are those that you know will occur on a regular basis, like weekly, monthly, quarterly or annually. Examples are the rent or mortgage payment, groceries and property taxes. They’re the ones that keep your household running — and are essential to your financial life. Unexpected expenses are those you don’t see coming and can’t always reliably estimate. Examples are things like finding out your car needs a repair in order to pass inspection, an unforeseen medical expense or having to pay for travel suddenly to attend a family funeral.

The takeaway? Some costs will always be truly unexpected, like car accidents or medical emergencies, while others are simply sporadic, periodic or uneven, such as holiday travel or an unusually high heating bill.

How to Identify and Tackle Your Expense Risks

The keys to better managing unplanned expenses are to 1) not overlook them, and 2) turn them into less disruptive events by trying to anticipate them and their potential impact. A good practice is to review your calendar over the past year, along with bank and credit card statements, to do some brainstorming to see and track what you spent. Here are some categories where common unexpected expenses can arise — and surprise — if you don’t identify and estimate them in advance.


What make and model car do you drive and how old is it? Many people underestimate the ongoing, average cost of owning and operating a vehicle — and repairs at some point are inevitable. Plus, accidents can’t always be prevented, and your insurance may not fully cover the costs.

What to do: AAA encourages drivers to set aside at least $50 a month to cover routine maintenance and deal with unexpected car troubles. And if an unanticipated cost comes up, ask the repair shop if they offer a short-term payment plan for customers.


Do you own or rent? Are you responsible for the cost of your utilities and do you know how much can they fluctuate by month or season? If you own, what’s the age and condition of your appliances, HVAC system, roof, water heater and other essentials, and how long can you expect them to last before replacement is necessary?

What to do: To handle unexpected expenses, think about creating a home maintenance fund for home repairs that’s separate from your other savings account. A popular guideline is to set aside 1% of your home value each year if possible — so, on a $250,000 home, for example, you would sock away $2,500.


Do you have children? If so, you’re probably well aware of the extra expenses that crop up. As they grow or circumstances change, review what you’re spending on activities, school fees, field trips, sports commitments and music lessons.

What to do: Realize that expenses increase as a child ages. For example, overall annual expenses average about $300 less for children from birth to 2 years old, and average $900 more for teenagers between 15 and 17 years of age, according to an ongoing report on the cost of raising a child by the U.S. Department of Agriculture.


How many people are in your household? Are any of them at the stages of life that are likely to experience medical emergencies? How good is your insurance? Are you aware of what your out-of-pocket healthcare costs would be for emergencies, co-pays and deductibles?

What to do: As health needs change, review your medical bills and the health insurance plan options offered by your employer during open enrollment to see what coverages, like an HSA, may be a more cost-effective fit.


Do you own any pets? Have you ever added up how much you typically spend on vet visits, medications, pet food and other supplies? Do they have illnesses or chronic conditions that could progressively get worse and require more care? What does your vet charge for emergency care should you need it? How old are they and what types of age-related issues are common for their breed?

What to do: Keep up with preventive care. And just as you look for discounts and competitive pricing on your and your family’s food and health needs, do the same with pets. For example, pet prescriptions ordered and mailed from online pharmacies can offer considerable savings over buying directly from your vet’s office.


Do you have a stable and predictable income? Do you have more than one source of income and an emergency fund? How many sources of income does your household rely on? If a significant unexpected financial challenge happens, is there a way to supplement income?

What to do: Commit to funding a rainy day fund as you can, and have a backup plan in case of an income drop or temporary job loss.

Special occasions

Anniversaries, baby showers, birthdays, family reunions, graduations, holidays, weddings — they may cost money to attend (if you must travel out of town, for instance) or celebrate and commemorate with a gift.

What to do: Spending on such life milestone moments may be easily overlooked until the special day arrives, but it often can be planned for if you keep important dates in mind. Estimate events in advance, and set a firm amount of money that you can reasonably earmark.

Planning for Unexpected Expenses

We all have expenses come up that catch us off guard. But by identifying them ahead of time and making room for them as we plan our finances, there’s a better chance of keeping unexpected costs from derailing the budget. The bottom line? The more you can turn potentially disruptive expenses into the nondisruptive type, the more likely your financial goals remain intact and on pace.