You were not expecting your car to break down, but it just did.
And that unexpected trip to see your loved one who is sick? You were not expecting that either.
Or you woke up this morning to completely cold water because your hot water heater is broken.
If you’ve been an adult for longer than five minutes, you know that no matter how well you’ve planned for life and how tight your budget is, unexpected emergencies do happen.
And most of the time, they happen at the most inconvenient time.
So how can you prepare for those unexpected expenses, or at the very least, take the “shock factor” out of the whole equation?
In this post, you’ll learn what you can do when all of a sudden, you have to pay for an unexpected expense.
What to Do If You Need to Raise Some Money Quickly
At this very moment, you need money and fast. If this is your situation, there are a few things you could do to start generating some cash immediately:
- Do you have extra clothes or items at home you’re not using? Perhaps some unopened Christmas gifts that never saw the light of day? Take pictures of the items with your cell phone and post them to Craigslist. You might be surprised as to what you can raise from that. You can also list your items on places like OfferUp, Letgo, and Facebook Marketplace.
- Go to the “for sale” section of Craigslist. Under there, you will find a category called “free.” This is where people in your local area are letting go of items for absolutely nothing. You can make the arrangement to go pick those items up, polish them up a bit, and sell them on any of the marketplaces (OfferUp or Facebook Marketplace) that I’ve mentioned above.
- Perform tasks for money. Perhaps you have nothing to sell. You can sell your services. Places like TaskRabbit, Fiverr, Craigslist, and Thumbtack always have people who are looking for someone to help them with something. Render your service and get paid.
Start an Emergency Fund (And Use It When an Unexpected Expense Comes Up)
You’re most likely reading this post after your unexpected expense came up. This is always a rough place to be.
However, to keep this from happening again, start an emergency fund right now.
Once you open the account, start funding it regularly.
If you start an emergency fund with as little as $50 per month, over the course of a year, that is $600 you’ve put away.
Should a big expense come up, you would at least have some money to cover the expense without it affecting your regular budget.
Start a Side Business
Perhaps you read the tip above and just thought, “My income is fixed as it is! How am I possibly going to be able to put money away for an emergency fund?”
My answer for this: Start a side business.
Starting a side hustle or a side business will help you earn extra money that you can put towards your “rainy day” fund.
And in those months where you don’t have an unforeseen expense, it will still be nice to have that extra money to spend.
A Side Note About Side Hustles
Sometimes, starting a side business is an excellent idea. But the truth is that many side hustles may not be sustainable over the long term.
This may mean that you need to increase your skills and network more so you can get a higher-paying job that will allow you to put more money aside for emergencies.
I recommend you do this instead of jumping from side hustle to side hustle trying to get something to work.
Build a Buffer into Your Monthly Budget
If you tend to create a budget for your expenses, build a buffer into your budget that accounts for unforeseen expenses.
This is especially helpful if you’re in a place where you make enough money that you could in fact build an emergency fund and a buffer into your monthly budget.
We can never predict an unforeseen expense.
Even that most financially prudent person is likely to face a financial emergency.
The best way to deal with such situations is to start preparing for them ahead of time. This is where starting a side hustle, building an emergency fund, and building a buffer into your budget come in.
On the other hand, if you find yourself faced with this challenge, you could raise money quickly as we discussed in the first point.
Whatever the case is, however, take a deep breath, create a plan for taking care of the expense, and then follow through on the plan.
Have you been faced with an unexpected expense in the past? How did you deal with it? We’d love to hear your story in the comments below.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.