Oscar Wilde once said, “To expect the unexpected shows a thoroughly modern intellect.” Well, while expecting the unexpected may seem a bit futile as well, we believe that when it comes to budgeting, there really are very few surprises.  We often hear from people who need help setting up a spending plan – a budget.  And what seems to cause the most trouble are the unexpected expenses.

One recent example is a listener that tried to put a budget together several times, but always seems to get derailed in December because that’s when and  homeowners insurance and annual car insurance premiums are due along with Christmas.  But this a case of not expecting the expected.  The listener isn't expecting these expenses when they hit her in December, but they aren’t actually unexpected.  It's known months before December, that the expenses are coming.  It’s more a matter of not expecting the expected.

Larry Burkett used to tell a similar story of a family coming to him saying that they had an emergency.  The tires on their car had worn out and they had to replace all four.  It was going to cost quite a lot and they didn’t have a way to pay for it.  Larry’s response was that this was not an emergency.  When you own a car, you regularly have to replace the tires just like you regularly have to change the oil and put gas in the tank.

So how do you plan for that?

Budgeting is a matter of looking at your expenses for the year and dividing them up into 12 bite-size pieces.  Christmas may come only once a year, but you pay for it a little bit at a time.  If you’re planning on spending $600 on gifts in December, you’ll start setting aside $50 each month in January.  Likewise with those other once-a-year expenses like insurance or membership fees. They must be in the spending plan. 

What about things that really are unexpected like expensive auto repairs?

Learn to anticipate them.  Take a look at what you spent last year on auto repair.  Talk to your mechanic to see what things are more likely to fail in the coming year.  The year and make of the car and the mileage on it will give the mechanic a pretty good idea.  Come up with a number for car repair over the coming year and divide that number by 12.  This will tell you how much money you should set aside each month to cover the repairs when they crop up.  It's always encouraged people to put some savings in their budget.  Don’t spend everything you make.  This enables you to adjust your budget when things that really are unexpected arise.

Source bankrate.com 2500 people asked "How would you deal with a sudden unexpected expense?"
Only 39% said "pay out of savings" and the rest said "credit card", "borrow from friends" or "take out a personal loan".

Next, Rob and Steve answer some listener questions at 800-525-7000 or via email at Questions@MoneyWiseLive.org:

• At 36 and 37 with new daughter with downs syndrome, what are the options for provide for her in the future?
• If you've made some bad financial choices in the past, have a budget now but things are pretty tight, what are some suggestions?
• If you have some credit cards that need to be paid off on a certain rate, is there a resource for figuring that out?
• Is it a good idea to pay off credit cards by refinancing your home mortgage?
• If you currently have several savings accounts divided up for different uses like Day to Day spending, Benevolence and Emergency, is this a good idea or should you just consolidate these accounts?
• If you've been attempting to get your finances straight with a budget but are just having trouble getting ahead, what are some tips to get things under control?
• If you're in your late 40s, have 2 children in private Christian school but are finding it's getting hard to afford, should you stick with the private school at any cost or should you reconsider?
• If you have no debt and pretty good savings   is it a better to take monthly annuity checks from your pension or just move it into your 401(k)?
• Is there a penalty for private pension within Social Security?

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