Expect the Unexpected

A few years ago my Bernese Mountain Dog, Bella (age 2 at the time), stopped eating for a few days. Berners can be finicky and don’t always eat voraciously, but by day 3, I was concerned. I brought her to the vet and they immediately identified something was wrong with her abdomen. An x-ray confirmed that she had an intestinal blockage and surgery was necessary. The quote for the surgery was several thousand dollars.

I won’t lie—the cost made me wonder for half a second if it was worth it. We didn’t have pet insurance and it would significantly set our budget back. Another half second and I knew we had no choice—this would be a major unexpected expense.

Most families do a great job of managing their day-to-day expenses but fall short of planning for the unexpected. You, like me, often get derailed by expenses such as pet emergencies, home repairs, car accidents or storm damage.

There is no way to predict when these crises will happen, but there are things you can do to plan for them. Here are some tips to help plan for the unexpected.

Prepare for lumpy expenses

Not all expenses are exactly unexpected, but they may be lumpy. For example, property taxes or insurance premiums may be paid once or twice a year. Set money aside each month to fund these expenses when they are due.

Budget for home maintenance

If you own a home, build 2-3% of its fair market value into your annual budget to cover maintenance. When the furnace breaks, you will have the money set aside to replace it.

Include a “miscellaneous” line item in your budget

While you can’t predict the specific unexpected expense that will arise in any given year, you can count on something coming up. Review your unexpected expenses from recent years to gauge how much you might set aside in your miscellaneous budget category.

Learn to say no

If family asks you to help pay for an expense, make sure you understand how it affects your own financial future. Don’t help pay for your granddaughter’s college if it sets back your own retirement plans.

When we picked Bella up from the vet, the surgeon identified the mass as the inside of a baseball. One of my sons had been practicing in the backyard and left a few stray ones around. Soon after surgery, I had Bella outside as I was getting the mail. When I turned to go back inside, she had a baseball in her mouth. We now have a line item in our budget for Bella.

Allison Donaldson

Allison joined HTG in 2013. She works with clients on financial plans, investment portfolios and account management. Allison has three sons, two of whom are currently in college and financially responsible. She’s still working on the youngest.

Allison is a graduate of Hamilton College and New York University’s Stern School of Business.