How to Budget for Unexpected Expenses Without Derailing Your Goals
How to Budget for Unexpected Expenses Without Derailing Your Goals
Why Planning for Unexpected Expenses Is Essential
No matter how carefully you plan, there will always be unexpected, and unwanted expenses crop up – from unreliable appliances to broken down cars, it is important to have a buffer to deal with these events. This blog post provides some suggestions as to how to plan for such instances, without having too much of an impact on your longer-term financial goals.
At Hansford Bell, we help you to identify your personal aspirations and working out how to align them with your current situation. This approach puts your life goals front and centre and endeavours to make them a reality, while also supporting you through the unexpected roadblocks!
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How to Calculate an Appropriate Emergency Buffer
So, how much should you have saved as an emergency buffer? It varies from person to person, but a general rule of thumb is to save the cost of 3-6 months essential outgoings (like rent or mortgage, bills, food and travel expenses. So, if this were to cost you £1,000 each month, you would ideally have £3,000 – £6,000 in an instant access savings pot. Of course, any money saved will help you in an emergency, but having a goal in mind can help you to stay focussed and motivated.
Building a Financial Cushion: Emergency Fund Tips
Beginning your savings journey can feel overwhelming, but Hansford Bell are here to provide support and advice, flexible to your monthly income or budget. We will help you to identify short term and long-term goals, and of course, how to maintain an emergency fund.
Commit to saving today…
It’s a good idea to get into the habit of saving little and often, aim to set aside a chunk of money each month, to maintain a steady pot. This could be just £50 a month – after 1 year you’d have £600 (plus any interest accrued). As your financial situation changes, you can up the amount you save each month – it’s a good idea to review your monthly outgoings regularly to see if there are any savings to be made; have you got a subscription service you no longer use? Could you meal plan to reduce waste and save money? These small acts add up to worthwhile savings over time.
- Identify your monthly income.
- Identify your essential monthly outgoings.
- Before budgeting for any treats, set aside a certain amount of money in a savings pot, relative to your income and outgoings.
The Modern-Day Piggy Bank
Most banking apps now allow you to create a pot whereby each time you spend money, the total is rounded up and the remaining amount is put into a savings pot. For example, if you make a purchase for £8.50, £9 will come out of your account and the extra 50p will move into a savings pot. This is a small way to help collect ‘spare change’ in an increasingly cashless society. Making small changes like this can have a big impact in years to come!
How to Prioritise Expenses When Money Gets Tight
There will be periods where no matter how much you focus on saving, money will still feel tight. This can feel overwhelming but knowing where to prioritise can help you to feel a little more in control of the situation.
- Focus on Necessities – Prioritise spending on essentials like housing, utilities, groceries, and transportation. You will likely need to temporarily reduce spending on things like entertainment, dining out or subscriptions that are not essential.
- Review Debts – While it is vital to continue making at least the minimum payments on debts, to avoid penalties, you can reach out to creditors and explore temporary payment relief options. You should ensure you have written confirmation of any changes to terms of repayment ahead of time.
- Rank Your Expenses – Write down all your expenses and rank them by importance. This visual approach can help you make clearer decisions about where to allocate your money first. Using a budget planner can be a helpful tool here.
Reducing Financial Stress: Practical Steps You Can Take
Talk it out
Money can be a taboo topic, but it is important to share your concerns, which is why we do what we do! We pride ourselves on our friendly, approachable yet expert team who are available to guide you through and help you to stay on track. It can also help to have honest conversations with your loved ones, let them know you are not asking for financial help, but simply a listening ear to help navigate a stressful period.
Start Small
Immediately committing to a large savings goal will lead you to feel unaccomplished and overwhelmed. Our team consider your income and essential outgoings to help you create and follow a manageable plan. Remember to celebrate milestones, create mini goals within your final goal to stay motivated.
Delay big purchases
Though making these decisions can be tough, it is sometimes necessary to postpone discretionary purchases like holidays or new furniture. Prioritise the essentials and put these on hold until your financial situation is a little more stable.
How Hansford Bell Can Help You Create a Resilient Financial Plan
We have a team of experts ready to help you, it’s not something you should have to tackle alone! We offer a free, initial consultation, allowing us to get to know each other and assess the best next steps for you. We’ll then move onto a more in-depth consultation and the creation of your personalised, achievable financial plan, helping you to reach your goals.
Find out how we can support you in achieving your savings goals with our financial life planning service.
Head to our blog post on creating a monthly budget to access our helpful budgeting planner > The Beginners Guide to Monthly Budgeting
Book your free initial consultation today, and get started on your financial planning journey.
Disclaimer: this article is for informational purposes only and does not constitute financial advice.
Hansford Bell Financial Planning Ltd is Authorised and Regulated by the Financial Conduct Authority: number 482388.
A Fresh Approach to Financial Planning and Advice.
Hansford Bell aren’t your average team of financial specialists. We take the time to get to know our clients and help them realise what they want from their life, whether that’s a personal ambition or a financial goal.
Our planners are highly experienced and know the industry inside-out. We combine simplified, straight-forward tips and guidance with cutting-edge technology and a comprehensive understanding of your situation. We focus on your finances, so you can focus on living your life.
Want to know more? Talk to us today and we can start making that dream future a reality!
