Real Talk: How to deal with unexpected expenses

Unexpected expenses happen to the best to us. A cracked cell phone, a parking ticket, a last-minute invitation to a birthday party: All good reasons to groan and break out the debit card—but nothing that will throw your finances completely off balance.

But what happens when something more major strikes? Like a medical emergency, or the sudden loss of a job, or a roof that springs a leak? Without a financial safety net, these are things that can take a real toll on your life and your bank account.

We spoke to Margaret Enman from Provincial Credit Union for some advice on how to manage when you’re hit by an unexpected expense.

1. Expect the unexpected

It’s by no means ideal, but here’s the thing about unexpected expenses—they’re going to happen at some point in your life.

“Unexpected expenses happen to all of us,” explains Margaret. “Sometimes they’re in the form of emergency home or vehicle repairs, but they can also include things like travel costs or equipment for a child that decides to get more serious about a sport or hobby they’re pursuing. The best approach is to have a savings plan and build up an emergency reserve. That way you’re ready for the extra expense when it crops up.”

2. Look into loan options

Having a savings plan is all well and good, but the reality is, not everyone that’s faced with an unexpected expense has it all figured out. We asked Margaret for some advice on dealing with an unexpected expense when you don’t have the back-up plan.

“If you don’t have the savings, you still have options. A financial expert can help you get set-up with a line of credit or a loan.”

A line of credit is also a helpful option—Margaret suggests opening one before the unexpected expense crops up.

“Open a line of credit before the emergency happens. It doesn’t cost you anything if you aren’t using it, but you’ll know it’s there if you’re ever in a bind.”

3. Cut back on expenses

According to Margaret, sometimes there are ways to manage an unexpected expense just by committing to some short-term lifestyle changes.

“It’s not always a fun option, but you can trim your budget each month—every dollar counts. Sit down and look at how you’re spending each month and take a hard look at how you can save. Sometimes short-term solutions like cancelling your cable or changing your phone plan can make a big difference while you get back on track.”

4. Ask for help

It’s easy to get overwhelmed when you feel like you can’t get on top of your finances. But Margaret reminds us that it’s never hopeless. A financial expert can help you work it out and create a plan for managing your debt.

“Sometimes people will wrack up credit card debt in an effort to take control of their unexpected expenses. This doesn’t always put them in the best position moving forward. If you sit down with a financial expert, we might be able to come up with a plan or provide an option that you haven’t thought of yet. It’s always helpful to have someone in your corner!”