How to deal with Unexpected Expense in your Budget

Most of us follow the budgeting system where we note down our income and expense, we will try to keep our expenses less than our income so that the extra money can be saved for investment and to create wealth. Unknowingly, many people do this budgeting to keep track of their financial status.

But sometimes unexpected happens and then you have to spend money on that and your budget system goes for a toss like your expense shoots up than your income and then you have to use Credit Card or loan to get that extra money and then the cycle continues. And if this cycle continues for more time then you will be in a debt trap and thus eventually your financial status will be weak.

To overcome such a scenario we always have to anticipate some unexpected expense which might come our way in the future and thus we have to be ready to deal with it. An unexpected expense can come in any form like a medical emergency, car fixing expense, birthday gifts and whatnot. In my case for expected expenses throughout the year, I have created a recurring deposit which gives me the money when required, but for unexpected expenses, we have to be careful.

Like we have to create an envelope for unexpected emergencies and put some money every month on that so that whenever there are expenses we can pull money from them. This is different from your emergency fund because the emergency fund will be mostly used in case of job loss and other bigger emergencies but for day-to-day unexpected emergencies, keeping some money aside without any fixed amount in mind is the best thing to do.

In this way we can deal with unexpected expenses, what we have to do is to have, is the discipline to be better with our budget.

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