According to the U.S. Bureau of Labour Statistics, the average American household spends on average over $60,000 per year. In particular, common expenses include bills for food, personal care products, healthcare, insurance, entertainment and apparel, as well as housing costs, utilities, fuel and transportation, .
However, there are many expenses that can arise that consumers easily forget about and fail to budget for. This guide seeks to reveal the top unexpected expenses so that you can keep them in mind when organizing your finances.
The Top Unanticipated Expenses Of 2023
To help you avoid surprise bills and unplanned spending, Pheabs has rounded up the top 4 unpredictable expenses for the typical American household:
1) Medical Costs
Unfortunately, health problems can arise that can lead to urgent or unexpected medical costs (see urgent loans). Whether it is fees to see a doctor, have an MRI or CT scan, blood tests, physio, prescriptions, dental fees or event pet bills for your beloved animal, these unplanned events can be costly. The cost of ambulatory services have also increased in the past decade to an average of $1,189.
It is not surprising that in 2019 the average household spent $5,193 a year on healthcare alone. See more figures in the table below:
|Average annual expenditure per household ($)||4,928||4,968||5,193||5,177|
Source: U.S. Bureau of Labor Statistics, Consumer Expenditure Surveys, September 2021.
Nearly 1 in 10 Americans, approximately 23 million citizens, owe medical debt, which includes roughly 16 million people who owe over $1,000 in medical debt, 11 million people who owe more than $2,000 and 3 million people who owe more than $10,000. These significant figures prove the importance of planning for this unexpected expense through budgeting and clever financial measures. Whilst there is the option of taking out loans for medical bills, a key way to avoid exorbitant emergency fees is by purchasing health insurance or to check if your employee offers sponsored health plans.
2) Home Fixes
Over the past year, it was found that 77% of homeowners had to deal with a surprise expense within the first year of purchasing their new home. There are many costs that can arise when living in a property, ranging from water damage repair to heating or plumbing fixes, mould issues, leaks or electrical malfunctions. The same applies to appliances within the house, such as a broken stove or an old TV that keeps crashing.
With this in mind, it is worth setting aside a set amount of money each year to help prepare for unexpected home costs. You can also consider getting home insurance which usually covers damages from events such as certain natural disasters. Depending on where you live you could opt for a policy that covers flood or earthquake damage.
It could also be beneficial to watch videos or do online research on how to do minor repairs yourself if possible. Or if you are not able to do so it is worth shopping around to find a builder or plumber who can help do the fixes at the best rate possible.
You should also take into account expenses that arise from both household operations and house keeping supplies. Regularly having to purchase cleaning products can start to add up so it is worth budgeting this into your monthly finances. Examples include paying for dishwasher detergent, washing powder and antibacterial sprays to name a few.
3) Car Repairs
Alongside the pricey costs of purchasing or leasing a car and paying for fuel fees, it is important to take into account potential auto repair bills as this can put a significant dent into your finances.
Examples of surprise car repair costs include paying for:
- Flat tires
- Car maintenance fees
- Accident or collision damage
- Engine issues
- Weather-related damage
- Battery issues
- Car breakdown emergencies and needing to be towed away
It goes without saying that getting car insurance is a sensible option that can help you save money in the long run. As well as this, being proactive by staying on top of your automobile with regular maintenance will stand you in good stead. For example, frequent oil changes will prolong the health of your vehicle and could save you from having to do high-cost engine repairs or replacements down the line.
When budgeting your typical monthly expenses, it is very easy to forget about gifts. With many celebrations occurring each year ranging from birthdays to baby showers, engagements and weddings, there are many reasons to spend money on presents for your close family and friends.
To avoid running out of money to pay for these special gifts, it is worth noting down all the regular birthdays you give presents for and working out a budget on how much you plan to spend accordingly. Keeping a reserve fund for unexpected births and engagements that may arise will only stand you in a strong position for when exciting milestones arise.
You can also get creative in your gift offerings. For instance, you could consider learning how to make homemade gifts which are much more meaningful and often half the price. Or you could find other ways to give gifts, for instance you could bake the person’s favourite treats or offer to babysit the newborn so that the parents can have a well deserved break.
It is inevitable that unexpected expenses may creep up on you from time to time. Saving as much as possible and making sure you are on top of planning ahead for unforeseen expenses such as medical bills, home or car repairs and gifts will certainly stand you in good stead and help ensure that you have a smooth financial journey in 2023. If you are looking for ways to boost your savings pot then check out our guide on “5 Small Changes To Help You Save Money“.