When is an Emergency NOT and Emergency?

All of us have unexpected expenses.  Truth be told, we all probably have unexpected expenses each month in one form or another that we didn't count on.  The price of gas goes up, personal property taxes are higher than we planned, the cost of a purchase that didn't include the additional shipping and taxes all little expenses that when unplanned can throw us off.

But since we know the unexpected is coming does it constitute an emergency necessitating the use of our precious emergency savings?  You may be saying that is what emergency savings is for; but if every time we have a blip in our spending plan we need to deplete our savings we will never be able to maintain that cushion for the true emergency that may be future. 

Emergency savings should be like insurance.  You have  to have it, but you hope you never have to use it.  Emergency savings is used when we have no other alternative barring debt to overcome the expense.  For smaller little unbudgeted items, we should first look to adjust our lifestyle spending.  In a true emergency, you fund just the basics.  Extra's like entertainment,clothing, even needed items that can be deferred for a while are.  If you have attended a Bank On Virginia Beach class you know about your 4 walls that need to remain in place: housing, transportation, food and clothing.  All else is put off until you get through the crisis. 

Here is a strategy you can use: 
  1. Quick Cash: when unexpected expense arrives, sit down as a family team and discuss ways that you can either quickly raise some money or cut back on expenses for the month to cover this additional cost.  By getting the entire family involved, everyone is on the same team and the forfeiture of a pleasure along the way is something that each team member willingly offers for the benefit of the larger picture. 
  2. Evaluate the expense:  is this something that will recur in the future?  Does your spending plan need to adjust?  What will flex to accomodate the additional expense? Can you plan now to keep it from happening again?
  3. Celebrate:  when the added expense has been addressed and the monthly bills are paid, celebrate as a family that you were able to come together and meet the challenge.  Working as a team paid off and hopefully, your family is all the stronger for meeting the challenge together.

Do you have a strategy for overcoming surprise expenses?  Write to us and tell us about it at bankonvb@vbgov.com.

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