What expenses do most people not prepare for that turn into "emergencies" but are not covered by an Emergency Fund?

Question

I'm looking for expenses that most of us should be planning for, but that we may not think about. Some of these would be re-occurring expenses that happen infrequently, while others would be one time expenses that are likely to occur at some point.

Update: I should have made it clear that I'd like to exclude things that insurance and an emergency fund would be able to cover. To me if the way to prepare for the expense is to have an emergency fund then the expense can't really be planned for and it truly an emergency. While insurance effectively prevents certain unexpected expenses from turning into emergencies, I'd like to exclude them.

Answer 1

Some things are nearly universal, and have been mentioned already. My "favorite" forseeable expenses in this category are:

• Disaster preparedness (hurricanes in my locale)
• Car fees
  • Licensing/registration
  • Inspection
• Car repair
  • Items that break, such as engine, transmission, etc. The car will break. Don't plan for this using your emergency fund.
• Car maintenance
  • Tune-ups
  • Scheduled maintenance
  • Consumables, such as fluids, tires, etc.
• Car replacement
  • If you are paid off, not having this expense may feel good. But, if the car dies, you will be scrambling to fit a car note into your budget. And, if the car lasts a long time, you may save enough to buy a replacement outright.

However, I also advocate saving for expenses that are specific to you. Look back on your expenses for the last 12 months, minimum (18 or 24 may be better). Ask yourself these questions:

• What expenses were an emergency for me?
  • Was it a real emergency, or was it forseeable?
• What were my large expenditures, emergency or not?
  
  • Was the large expenditure forseeable?
  • Did I budget for it?
  • Why didn't I budget for it? (a question I recently added to my process)

I ask about large expenditures because you may make enough that you can "eat" these lapses in budgeting, as I did for many years. It is not an emergency now, but it turned into an emergency down the road as my spending went out of control. Look at all expenditures over a certain level, say $100 or $200.

Some personal examples of expenses that aren't quite so universal, but turned into small emergencies:

• Social organization dues
• Personal convention attendance
• Professional organization fees and dues

This last one was rather unexpected. It is the reason why I ask the question "why didn't I budget for it?" These fees and dues are for my professional-level certifications. In my industry, they are "always" paid for by the company. A year ago, they weren't paid by my former employer because they planned to lay me off. This year, they weren't paid by my present employer because I am technically a temporary worker (4 years is temporary?). So, from now on, I plan to save for this expense. If my employer pays my dues, then I stop saving for the expense, but keep the money I've saved.

Answer 2

Annual property tax and home insurance come to mind as things that are easily forgotten, but surely the biggest true, "I didn't see that coming," is a major car repair.

There are a number of things that can go wrong with a car with little warning and end up costing a thousand dollars or more. Since most people are dependent upon their car for getting to work, doing anything but fixing or replacing the car is not an option. If you fix it, that's an out of pocket expense that most aren't prepared for. If the car has some age, you might be inclined to replace it, but doing so in a rush costs a lot more than taking your time in such a decision.

Answer 3

Here's a few. Is this what you're looking for? Also this should probably be a community wiki.

• Broken stuff: car, appliances
• Broken body: urgent medical expenses, loss of income due to medical issues or having to care for a relative
• Retirement
• Holidays/Christmas
• Loss of overtime or job loss
• Home maintenance: Painting, maintenance of roof flashing, maintenance of heating system

Answer 4

The way you ask this is interesting, it implies (quite correctly) that for many, an annual bill for house insurance, property tax, etc, can turn into an emergency.

My answer to the true emergency is a breakage that can't be foreseen (although you have to know the furnace isn't going to last forever) or a medical bill that's not covered (our dental is limited and the Mrs root canal can be $1000 out of pocket)

Answer 5

Extended illness/disability that prevents you from being able to work.

Edit:

Leigh Riffel: So, why should this be expected, and how should it be planned for?

Some of us may be fortunate enough that this never happens, but I've known enough unlucky people to have seen that it can and does happen.

Prepare for it with:

• Health insurance. Needless to say, it's pretty tough to lose your income (since you can't work) and have huge new bills from medical expenses (since you're sick).
• Disability insurance. (This is expensive.) This can cover you if you have a complete, permanent disability. It can also cover you if you are unable to work for a period of several months.
• Emergency fund. This is one of those categories of emergency that your emergency fund is for. It can replace your income if you are out of work for only a short time (several weeks). Or if you are disabled for a longer period, it can be a bridge to cover your expenses until the waiting period for your disability insurance kicks in.
• Build your personal network. Be prepared to help your friends and family when bad stuff happens to them. Don't be afraid to ask them for help when you need it. "Help" may be direct financial help, but often you may find you need someone to help you keep track of the logistics of taking care of yourself.
• Create a low cost lifestyle. If you have a huge mortgage payment, high monthly bills, and other long term financial obligations, it will be very stressful to reduce or lose your income. Set yourself up so that you can cancel as many recurring expenses as possible should something bad happen to you.

Answer 6

insurance premiums

My annual car premium always caught me off guard until I set up a dedicated savings account for it.

Answer 7

While it is true that homeowners insurance will cover emergencies, it is very important to check and make sure that your policy is covering everything that it needs to. A great example is what happened to all of those without flood insurance in Tennessee last year. You may opt not to get additional coverage, but then you should make sure that you are setting aside funds for such a catastrophe.

Answer 8

The most obvious one these days is unexpected and extended unemployment. If you are living paycheck to paycheck, you are asking for trouble in this economy.