It’s easy to budget when it comes to groceries, dining out and the occasional movie, but when those unexpected expenses hit, you’re in for a world of hurt if you don’t plan accordingly. Unfortunately, approximately 50 percent of all Americans don’t have the funds necessary to handle the big expenses when they come, according to Business Insider. These Americans have less than one month’s income in their savings accounts when unexpected expenses arise.
This could be seriously debilitating. Consider this: The median American income is approximately $50,500, which equates to about $4,200 per month. Business Insider indicates that half of these people have less than $4,000 in their savings account, which pales in comparison when you think about how much some of the most unexpected costs can hurt you.
- Auto transmission replacement: $3,000
- Broken arm: $3,000 (without insurance)
- Emergency room visit: $2,000
- Pipes burst: $5,000+
- Baseball comes through your window: $500
- Death of a loved one: $20,000+
- Loss of job for six months: $30,000+
The key to protecting yourself from these extreme costs is to take action now to cut costs and build your savings. There are several things you should be doing to protect yourself from surprise bills that you can’t pay.
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1. Adopt Couponing
Couponing is a great way to save money all around. Some report saving as much as $600 a month on groceries and dining out alone, which offers a considerable amount to put towards your savings account.
Image via Coupons.com
One little-known fact about couponing is that you can find coupons for major expenses too. For example, when your car breaks down, you can find coupons for automotive work in your area, and save as much as twenty percent on your entire service, which really adds up.
2. Cut Extraneous Expenses
You can save hundreds a month, just by cutting out the things you don’t really need. For example, you might have a gym membership you’ve never used or subscriptions to magazines that you never read. You can also find cheaper deals on cable, phone, energy, insurance and more if you look. Trimming down each of these expenses will give you a significantly larger amount to put into savings each month.
3. Trim Budget Categories
If you don’t keep a budget, start one. If you do, take a closer look at ways that you can trim down your budget categories. You might take $100 out of your dining out budget and put that extra money towards saving or paying for a current unexpected expense. Reallocate some of that money to other categories to make the money stretch where you need it most.
When you sit down with your budget and determine what you really need, you’ll likely be able to find a good chunk of the money you need to pay your extra bills.
4. Eat In
When faced with hefty surprise expenses, one of the first things to go should probably be your affinity for takeout. Instead of eating out for lunch and dinner, make a large, homemade dinner the night before, and then brown bag the leftovers for lunch the next day.
Also, skip the coffee run in the morning and opt instead for making your own and packing it in a thermos. You’ll get used to it eventually, and your savings account will thank you.
5. Split the Cost with Next Month’s Budget
Sometimes, the best way to scrape up some extra cash is to split the money between this month and next month. Generally, when you have an extra expense, you have 30 days to pay it off. That means that you can use the money from this month’s paycheck to make a payment and split your cost of living with the money you’ll receive the next month.
For example, if you normally place $400 in the grocery budget for each month, you’ll place $200 for this month and $200 for next month. This will mean a considerable amount of scrimping for the next 60 days, but it could mean the difference between being able to pay your bills and receiving a hefty late fee.
6. Price Match
Shopping for convenience sake is a luxury when you have big bills to pay. A great way to save money is to price match at all the stores in your area and shop only at the stores with the lowest prices until you can get back on your feet.
Unfortunately, this might mean battling the crowds at your local Wal-Mart or visiting a discount grocery outlet store rather than enjoying the fresh produce at a nearby market. But it will also mean that you can pay your bills, and if all works out as planned, you’ll be back to a normal lifestyle before you know it, but this time, with a little more savings in tow.