Unexpected Expenses That Will Ruin Your Finances

Smart financial planning isn’t just about creating a budget for your usual expenses every month; it’s also about expecting the unexpected and planning out your finances accordingly. Because emergencies happen, and just about everyone has to face a major unexpected expense at some point or another, most financial experts recommend establishing an emergency find that will cover at least three months’ worth of typical expenses (that should be a big part of your budgeting process). If you’re still on the fence about establishing an emergency fund for you and your family, here is a look at some of the most common emergencies that can crop up and wreak havoc on your finances.

Medical Bills

Many media outlets are reporting that medical bills are the number one cause of personal bankruptcy, and when you consider just how high medical bills can average, it’s really no surprise. According to the federal Agency for Healthcare Research and Quality, the mean medical cost for a surgical stay in a hospital in 2012 was $21,200. Nonsurgical stays, meanwhile, averaged at around $8,500, while maternal and neonatal stays were about $4,300. Facing an unexpected bill like this one can leave you scrambling to find sufficient funds, draining your savings or even dipping into your retirement fund. And it isn’t true that only those without health insurance are suffering. According to a report released by the Kaiser Family Foundation and The New York Times, 20 percent of people with health insurance had trouble paying medical bills in the past year. Still, that rate is much higher for those without medical insurance. According to the same report, 53 percent of people without health coverage had trouble paying medical bills in the past year.

Home Repairs

Even with home insurance, home repairs can end up costing you thousands of dollars, especially if you have a high deductible. Home repairs are an especially important emergency expense to worry about because while not a part of your monthly budget, they can crop up multiple times every year.

Car Repairs

The same goes for car repairs. The best-case scenario for a car repair is that you’ll only have to pay to replace a few minor parts, but a repair could easily cost you several hundred, or even thousands, of dollars. Moreover, your car could need so much work that you’ll ultimately have to replace the car entirely. Car insurance can help reduce your chances of facing an unexpected car expense, of course, but there is still always the chance of having a high deductible or having some portions of your repair not covered by insurance.


No one goes through everyday life expecting to get sued, but lawsuits happen more often than you think. In fact, an estimated 15 million legal cases are filed in the United States every year. A lawsuit can be a major detriment to your finances, especially if you do not seek legal aid. Most civil suits wind up in a small claims court and settle for an amount between $3,000 and $10,000, but a lawsuit could also run you in the hundreds and thousands of dollars. No one can ever be fully prepared for a lawsuit, of course, but there are things you can do to protect yourself. An attorney who specializes in estate planning, for example, could help you make wise financial steps toward asset protection.

Job Loss

Job loss is often listed as the primary reason to establish an emergency fund in the first place. Even top performers at a workplace can lose their jobs, simply because employers sometimes face the need to downsize. Since job loss means suddenly no longer having an income, an emergency fund can kick in and allow you to maintain your typical lifestyle. The average period of unemployment lasts 40 weeks, so even if you’ve already established a six-month emergency fund, you may consider adding more to that fund.

Death in the Family

A death in the family can also affect your finances significantly. Not only are there funeral costs to consider, but there are also travel expenses and financial support for family members to consider, as well.

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