Author: Jennifer Outram, SEO & Digital Marketing Specialist  Big Leap, LLC jen@bigleap.com

When they think of unexpected expenses, most people think of repairs from a car accident, repairs from a leaking roof, or medical bills from an injury. And many people who haven’t experienced these things think that they don’t need to worry about having an emergency fund because frankly, they’re just cautious people. But if you look at your budget and your past expenses, you’ll find that there are always unexpected expenses popping up, even if they aren’t huge like replacing a roof.

Things like gifts, special occasions, school and activity fees, and pet emergencies can all sneak up on you and leave you frantically trying to shift your budget around to cover the cost. To avoid the stress and, worse, having to charge the expense to a credit card, use these tips to plan for unexpected expenses.

Create a $1000 Emergency Fund

Everybody should have an emergency fund to cover unexpected expenses, and $1000 is a good starting point. While this may seem excessive to some, especially the cautious I mentioned above, you can’t control things like the weather, or the diseases or death of family members and friends who live afar. If you find yourself having to miss work and travel for a funeral, this fund can save you financially. If a tree falls on your roof, this fund can help.

It’s important that this fund is not easily accessible so you aren’t tempted to touch it for unnecessary items. Set it up in a secure savings account that can’t be accessed with a debit card or ATM.

Review your previous year’s expenses

Maybe you already have an idea of what’s ahead. Perhaps you live in an area prone to flooding, or severe snowstorms. This can give you an idea of what kind of unplanned expenses may come your way, maybe in the form of snow tires or disaster restoration services. Maybe you realize that four of your family members have birthdays in June and all threw parties that you were expected to attend. You can plan to spend extra money that month on gifts.

Start creating space in your budget for these items. You never really know how much damage or repairs you will need, which is where your emergency fund can kick in if the amount you allotted in your budget for these items is not enough. Set aside money for holidays and birthdays, and a little extra for work parties or other events that will probably pop up.

Expect the worst, or at least that something will come up

It’s best to just kick that “it won’t happen to me” attitude right out of your head, because it can, and it will. You can’t control how other drivers will act, you can’t control if your children’s classmates come to school with strep throat, or if your dog chases and eats a bee and, surprise, is allergic.

At some point, your car will need maintenance. You will get sick. An appliance will require repairs. Make a list for each family member (including pets) or aspect of your life. Some categories can include home repair, car repair, missing work, medical bills, vet bills, etc. Figure out how much you can allot monthly to each category. Then if an emergency comes up in one category but not another, you can dip from the others without having to use the money for bills or groceries.

Fix your credit

Lastly, make sure your credit score and history will work for you if you do need a personal loan or another form of borrowed money to cover a significant unexpected expense. When it rains, it pours (or so they say), so after you’ve used your emergency fund it may be necessary to borrow mother rather than risk getting stranded or worse. So fix your credit to make sure that unexpected expenses don’t set you back more than they have to.

Skip the cart

Shopping carts are big and getting bigger. Seriously. If it’s just a habit to grab a cart when you go shopping, opt for a basket instead. You won’t be able to fit as much and your arm will get tired, so you’ll naturally shop and spend less. This will help you stick to your list and avoid impulse shopping, so skip the cart and reach for a basket or your own arms instead.

These tips can help you gain control of your finances and rein in your spending.

Are your close relationships helping you to become rich and successful ……

or bankrupting you? Be very careful who you associate with. They may be making you poor by association.

Author: Jennifer Outram, SEO & Digital Marketing Specialist  Big Leap, LLC jen@bigleap.com

Statistics have found that debt isn’t about how much money a person makes, but how much money they can hang on to and manage. You’d probably be surprised at how many of the seemingly well-to-do people you know are actually buried in significant debt, and frantically trying to fix their credit as a result. But what makes debt such a trap for some people, regardless of their careers or income?

If you did some digging, you’d probably find that they share these five common characteristics of people in debt.

1. They Are Impatient

People in debt are often impatient and impulsive. “Sleeping on it” and window shopping is not an option for these people – they want what they want, when they want it. They are all too familiar with credit card payments and financing options, so they know they don’t need to have the cash in hand to buy whatever is appealing to them in the moment.

To break or avoid this habit, get yourself into a cash-only mentality. Know the balance of your accounts at the start of each day, and grant yourself a certain amount of cash for your purchases. If you can’t pay cash for it, don’t buy it.

2. They Rationalize

This goes hand-in-hand with their impatience. When they see something they want, there is always a good reason (or excuse) to buy it right then. These people often confuse wants and needs, and because they are also impatient they don’t take the time to think out the purchase to actually determine if what they’re about to charge is a need or a want.

To break this habit, reward yourself with experiences or free/less expensive things instead of things you can purchase. Also, take a picture of anything you’re about to buy and send it to a trusted friend or family member with the caption, “Do I realistically need this?” This will give you another perspective and also give you time to realize that you probably don’t.

3. They are insecure

The first two habits are often a symptom of this third characteristic, which is insecurity. For whatever reason, many people find comfort and security in tangible belongings or what they can buy – whether it’s a nice car, house, the newest smartphone, an exotic vacation, designer clothes, or what have you.

On the surface, it may seem that these people are happy, successful, and secure, so imitating them must mean that you’ll have that as well, right? Wrong. If you don’t have the money to do so, then you’re setting yourself up for the exact opposite. Stress, financial despair, and more insecurity as you constantly struggle to keep up with the Jones’s, who are more than likely trying to keep up with someone, themselves, is what you have to look out for when you jump on this bandwagon. Stay out of this cycle.

4. They Lack Perspective

People in debt rarely have much of a savings or retirement fund. They don’t think about the future or plan for the unexpected. They often have the, “it won’t happen to me” mentality, but that’s the thing about life – it always does. Maybe they’ll be lucky and avoid anything big, but even having the funds to repair or replace a flat tire, fix a broken window, or fly to visit a sick or dying family member may not be available for people in debt.

To work on this habit, start by calculating your monthly expenses and starting an emergency savings that can cover 3 months worth of expenses in case something happens. Make sure this fund is not easily accessible so you don’t dip into it unnecessarily.

5. They are disorganized

People in debt don’t know what days their bills are due, or what amount is due. They likely have bills on auto-draft to avoid missing a payment and to save time, but often find themselves hit with overdraft fees because the funds aren’t always there.

To avoid this, get yourself more involved with your finances by manually paying your bills each month. Set reminders on your calendar and phone so you don’t miss a payment, but if you take the money out yourself and can see the balance, you will have a better idea of what your financial situation looks like consistently.

Skip the cart

Shopping carts are big and getting bigger. Seriously. If it’s just a habit to grab a cart when you go shopping, opt for a basket instead. You won’t be able to fit as much and your arm will get tired, so you’ll naturally shop and spend less. This will help you stick to your list and avoid impulse shopping, so skip the cart and reach for a basket or your own arms instead.

These tips can help you gain control of your finances and rein in your spending.