Unexpected Expenses: How to Handle them?

Unexpected Expenses

No matter how well we are financially prepared for an emergency, it’s never enough. However careful we are at budgeting, at some point, we all are likely to face unexpected expenses. These are not just medical expenses, it can be anything related to your home repairs, car repairs, pet emergencies, etc.

The obvious ideal situation is your rainy-day fund paying for the unexpected expense. But for how many of us that would be enough? Some try to cope with unexpected expenses by taking a cash advance from a credit card, or taking a new loan, these are just expensive alternatives. These options would affect your financial stability further; you are just adding the interest debt to your existing situations.

Consider the following options before you decide on a credit card payment to address your unexpected expense:

Cut down on unnecessary spending

Look at options where you can cut down on your usual expenses to make room for the unexpected expenses. For instance, rather than spending on meals outside, try cooking your self, trust me, you can save quite a bit, or withdraw from your monthly subscriptions which you can go without. I’m sure you are wondering that cutting down on expenses like these wouldn’t help you pay for the unexpected bill in its entirety. But wouldn’t you agree that it would help in lowering your borrowings from other sources?

Ask for help from friends or family

Addressing unexpected expenses can be a nightmare, so ask for help. Try asking your friends or family who’ll be willing to help you in your difficult times. They may be more helpful and understanding than a bank. Additionally, they won’t be charging high-interest rates like banks. Its good to pay for your expenses without borrowing, but if there isn’t any other alternative, reach out to someone that you know rather than taking a credit card or a loan who’s charges and fees are higher.

Encash your investments

Ideally, it’s not advised to encash your investments to pay for your unexpected expenses. But in emergency situations when you have the resources available, then it might be the best option. Ensure that you aren’t withdrawing your investment at a certain cost. For example, in the case of bonds and fixed deposits, premature withdrawal results in penalties in the form of reduced interest rates etc. In case of your equity investments as well, make sure you are selling only the ones which may incur less loss.

Dispose off things that you no longer use

For sure every house has a lot of things that they don’t use. Don’t you have that one DVD player that you no longer use or some extra furniture that no longer matches your interiors? Why not sell them? In this digital era, it’s not a difficult task at all. Post an advertisement online and you are connected to a lot of buyers. It might surprise you that within no time you are able to raise money to meet your expense and at the same time you are clearing the clutter at home. Again, this money might not be enough to pay your expense completely, however, something is better than nothing right. This will help you lessen the burden of borrowing higher amounts.

Cover emergency expenses with a low interest loan

As a last resort, take a loan with interest as low as possible. When you avail such loans, make sure you are determined towards paying off the dues in time and are not incurring higher costs due to delays. Loans are never cheaper and will only get costlier if you start missing your deadlines. Therefore, for as long as you can try avoiding missing your repayments, in case you take a loan.


Once you address your unexpected expenses, make sure you make it your highest priority to invest/save towards emergency fund. Next time when you incur an unplanned expense, you can simply rely on your emergency fund. Upwardly can help build an emergency fund that would help you cover the most unexpected expenses. Try the Goal-Based investing option for building an emergency fund. This goal helps you sail through rough times in your life. Most of us park some money in our Bank as a safety net for such situations not realizing that our money depreciates in value every year due to inflation. Your money will be invested in Low Risk, Quick Withdrawal, Inflation beating funds only.

Also, for short durations like less than a month or so, you can hold cash in Super Savings Account (SSA) at Upwardly rather than having them sit idle in your bank account. This gives a great opportunity to multiply your money even if it’s for a couple of days.

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