Budgeting for Unexpected Expenses
Life is full of surprises—and not all of them are pleasant. According to a recent report, 56 percent of American adults have dealt with a "surprise expense" in the last year, with an average cost of a whopping $5,500. These financial curveballs can bust a budget and create immense stress. The good news is that with the right planning, you can be prepared for anything.
So, what exactly are these unexpected expenses, and how can you budget for them?
Common Surprise Expenses & How to Prepare
Unexpected expenses can be anything from a broken-down appliance to a family emergency. Here are a few of the most common ones and a look at what you can do to be ready.
- Home Repairs: A sudden home repair can cost thousands. While a major foundation issue can run about $5,000, a new roof can set you back anywhere from $15,000 to $27,000.
- Your Plan: A good rule of thumb for housing repairs is to try and save between two and four percent of your home's value each year. Setting aside a small amount each month can prevent a major repair from derailing your finances.
- Vet Visits: Our furry friends are family, but they can also be expensive. While a routine vet visit costs between $40 and $200, a surprise dental issue could run you anywhere from $300 to $2,000.
- Your Plan: Look into pet insurance to manage these costs. Another option is to create a separate savings account for your pet's needs, so you're ready for both routine and unexpected care.
Options for Saving for All Scenarios
The best way to prepare for unexpected expenses is to start saving money before you need it. This can feel daunting, but it's easier than you think. You don't need a massive amount to start; you just need to start.
The key is to create a dedicated "Rainy Day Fund." Even if money is tight, setting aside just $10 a week can help you save $520 in 12 months.
At Mid Minnesota Federal Credit Union, our savings goals feature can help you plan now to avoid debt later. MMFCU can help you make your savings automatic and meaningful. You can create specific, tangible goals for each of the scenarios above—a "Home Improvement," a "Medical Savings" account, or a "Pet Emergency" fund—and automate transfers directly into those accounts every time you get paid. This simple step helps you stash cash without having to think about it every month.
Need a Little Breathing Room? MMFCU's Skip-A-Payment Program
We understand that even with the best planning, life can still throw unexpected curveballs. If you find yourself in a financial hardship due to an unforeseen circumstance, MMFCU is here to help.
Our Skip-A-Pay program is designed to provide you with financial flexibility when you need it most. This program allows eligible members to defer up to two monthly loan payments on qualified loans within a 12-month period. This temporary pause can free up funds to cover an emergency expense, giving you the breathing room you need to get back on track.
Whether you're just starting to save or need a little help in a tough spot, your Mid Minnesota Federal Credit Union team is here to support your financial wellness journey. Call or text us at (218) 829-0371 or stop by your local office to learn more about our savings goals feature and the Skip-A-Payment program.
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Mid Minnesota Federal Credit Union is federally insured by the NCUA and we are an equal housing lender.
*To qualify for Skip-A-Payment program, your Mid Minnesota Federal Credit Union loan account(s) must be good standing (loans must be current and have no more than two late fees in the last six months). There is a maximum of two skipped payments within a rolling twelve-month period, and six within the term of the loan only. Paper application requests must be received at least 10 days prior to payment due date. Interest will continue to accrue and may exceed payment. New loans that have not had at least six payments are not eligible. Skip- A-Payment application is pending approved credit; other restrictions may apply. Loans NOT available for skip payments are loans with 180+ monthly terms, first mortgage, modified loans, home equity loans, student loans, commercial loans, lines of credit, HELOC's and VISA cards. Skipped payment will affect GAP claim amount on qualified loans. To view full disclosures, go to mmfcu.org/borrowing/skip-a-payment.