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According to the U.S. Bureau of Labour Statistics, it’s been found that the average American household typically spends more than $60,000 per year. Common expenses in this regard involve bills for food, personal care products, healthcare, insurance, entertainment, apparel, as well as costs related to housing, utilities, fuel, and transportation.
However, there are numerous expenses that often slip our minds and are not accounted for in our budgets. With the aim of being helpful, this guide aims to bring such unexpected expenses to your attention so that you can plan your finances accordingly.
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The Top Unanticipated Expenses Of 2023
Welcome to Pachyy! We’re here to help you avoid surprise bills and unplanned spending. We’ve gathered a list of the top 4 unpredictable expenses for the typical American household:
1) Medical Costs
Unfortunately, health problems can arise unexpectedly and lead to costly medical expenses. These can include doctor fees, MRI or CT scans, blood tests, physiotherapy, prescriptions, dental fees, and even veterinary bills for your beloved pet. Ambulatory services now average around $1,189.
In fact, in 2019, the average household spent $5,193 a year on healthcare alone. You can find more figures in the table below:
|Average annual expenditure per household ($)||4,928||4,968||5,193||5,177|
Source: U.S. Bureau of Labor Statistics, Consumer Expenditure Surveys, September 2021.
Did you know that nearly 1 in 10 Americans, approximately 23 million citizens, owe medical debt? This includes around 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. Planning for unexpected medical expenses through budgeting and financial measures is crucial. Additionally, purchasing health insurance or checking if your employer offers sponsored health plans can help you avoid high emergency fees.
2) Home Fixes
Within the first year of purchasing a new home, 77% of homeowners had to deal with unexpected expenses. These can range from water damage repairs to heating or plumbing fixes, mold issues, leaks, or electrical malfunctions. Household appliances, such as stoves or TVs, can also require costly repairs or replacements.
To prepare for unexpected home costs, consider setting aside a specific amount of money each year. Home insurance is also worth considering, as it usually covers damages from certain natural disasters. Depending on your location, you can opt for a policy that includes flood or earthquake damage.
Learning how to do minor repairs yourself through videos or online research can save you money. If you’re unable to DIY, shopping around for the best rates from builders or plumbers is recommended. Additionally, budgeting for household operations and cleaning supplies, which can add up over time, is important.
3) Car Repairs
In addition to the initial costs of purchasing or leasing a car and paying for fuel, it’s essential to consider potential auto repair bills.
Surprise car repair costs can include flat tires, maintenance fees, accident or collision damage, engine issues, weather-related damage, battery problems, and emergencies requiring towing.
Getting car insurance is a wise option that can help you save money in the long run. Regular maintenance, such as frequent oil changes, will also extend the lifespan of your vehicle and reduce the need for expensive engine repairs or replacements.
When budgeting your monthly expenses, don’t forget about gifts. Birthdays, baby showers, engagements, and weddings often require spending money on presents for family and friends.
To avoid running out of money for special gifts, make a list of regular birthdays and create a budget accordingly. It’s also helpful to keep a reserve fund for unexpected births and engagements. Consider getting creative with your gift offerings, such as making homemade gifts or offering personal services like babysitting.
Unexpected expenses may arise from time to time, but being proactive and planning ahead can help ensure a smooth financial journey in 2023. Check out our guide on “5 Small Changes to Help You Save Money” if you’re looking to boost your savings. We’re here to support you every step of the way!