Planning for Unexpected Expenses

Life happens. Unplanned expenses or emergencies are common life events. Whether it’s a home repair, car repair, family emergency or job loss, sudden expenses can put a dent in any budget. Here are three tips to help you save and prepare for the unexpected.

Build Your Emergency Fund.

A savings plan should include building an emergency savings fund to handle these unexpected expenses. A general rule of thumb is to set aside six months of living expenses in your emergency fund. If that isn’t realistic for your situation, start with what you can. It’s most important to get into the habit of prioritizing your savings and to begin making progress. You don’t have to accomplish the whole goal all at once.

Set SMART Goals.

The SMART acronym provides a strategy for reaching savings goals that are Specific, Measurable, Achievable, Realistic and Time-Based. For instance, let’s say you can tuck away $20 each week to hit an annual savings goal of $1,000. Measure your progress each week and modify as needed. By keeping it SMART, you will more likely achieve savings goals when bite-sized amounts are saved over a realistic time.

Set it and Forget it.

Many successful savers automate monthly deposits to make saving as painless as possible. Decide how much you can put into savings and set yourself up with an automated transfer. Another good option is to automatically direct deposit a portion of your paycheck into savings every payday.

These tips were shared by our partners at GreenPath Financial Wellness, a trusted national nonprofit.