Car payments. Mortgage. Groceries. If you have a good budget, all your expenses are accounted for. But where are the funds for "bridesmaid at best friend's wedding" or "run car into curb?" It's frustrating when a surprise expense throws your budget off. But some financial setbacks are predictable. Check out our top 10.
1. Car repairs
Minor or major accidents and gradual wear and tear on your vehicle can leave you staring, open-mouthed, at an unplanned bill in the hundreds of dollars. Prevent unnecessary expenses by checking your owner's manual and scheduling your car's recommended maintenance -- on time.
2. Price hikes
Gas and insurance prices keep rising. You can't control the price of gas but you can shop around if your insurer is raising your premiums. Curb costs by carpooling to work and take up energy-efficient habits like not idling when you stop for that morning coffee.
3. Job loss
Losing your job can be traumatic, but if you're in a relatively stable financial situation, you should be OK financially. While unemployed, keep your expenses to a bare minimum and, if you're even remotely concerned about your finances, look for a job ASAP.
4. Weddings and birthdays
Maybe this is the summer of weddings, or your little boy suddenly has birthday parties scheduled all fall. Thin out your responsibilities by turning down less important invitations, get the most value from your dollar by being part of group presents, and be creative in your gift giving. If all else fails, remind yourself that you, too, have a birthday, so (hopefully) it'll all come back -- if nothing else, in karma.
5. "Happy" holidays
OK, so this isn't unexpected. But many people declare bankruptcy in the beginning of the year, after their Christmas shopping has caught up with them, explains Laurie Campbell, spokesperson for Credit Counselling Canada, a non-profit group that educates the public and helps people avoid bankruptcy. "It's just not a planned expense," she says. Figure out where that money is going to come from ahead of time.
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6. Impulse buying
When the seasons change, we go shopping and follow through on whims, like buying yet another pair of shoes via a little credit card debt. Impulse buying is what gets most people into trouble, says Campbell. A detailed budget will keep your expectations reasonable. "People don't know what they can actually afford," she explains. Know where that money will eventually come from -- like your holiday fund -- and those shoes will start to look less appealing.
7. Hidden fees
Sales and "special" offers are everywhere -- right along with hidden fees and charges, whether it's credit card annual fees, or cell phones service fees. Don't be taken in by credit cards with 0% interest for the first six months -- most people don't switch to another card after that, and you may to be paying high interest when the promotional period ends. Think long term. And ask salespeople about the total you will be charged, including all fees, not the special deal rate.
8. The break-up
Moving on after a bad relationship can be glorious; moving out is nothing but expensive. Between first and last month's rent, phone, hydro, and cable bills, you can end up spending a serious chunk of cash to get established in your new home. If you would never stay in a relationship because you couldn't afford to leave, make your budget reflect that -- including keeping enough funds in your account to cover first and last rent.
9. Dog days
Now that your veterinarian can remove Rover's lump at costs of only thousands of dollars, an animal's illness comes not only at an emotional price, but at a high financial one too. If you're worried about saying "no" to those big brown eyes, consider investing in insurance for your pet. You'll still be paying to keep your pet healthy, but at least it's a planned expense.
Dealing with sickness is often impossible to plan for -- you just need the money to have time off. "You need three to six month's salary in a slush fund," says Campbell. She recommends putting five to 10 per cent of your paycheque in savings each week. Doing so will keep you prepared for everything -- from a major illness to that ugly bridesmaid's dress.
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