​​How to Cover Unexpected Household Expenses

Maintaining a stable household requires much more than meets the eye. A smooth-flowing home requires a financial stronghold or at least a foothold. While some may pride themselves on excellent personal finance skills, things may get out of hand in an instant. 

Although you may have set your financial capacities straight when it comes to household expenses such as food, transportation, and bills, you can never predict what may happen in the future. For example, a water heater may burst, or the car may need urgent maintenance, and suddenly, you may find your finances flying right out the window.

While there is no way to predict a disaster and prepare for it ahead of time, there are some extra precautionary measures you can implement to get a head start.

Types of Household Expenses

Household expenses are costs related to maintaining a home. They include everything from mortgage payments to utility bills to groceries. If you have roommates, these expenses can be divided by the number of people residing in the home to find each person’s share of the total expense. 

Young adult budgeting

People usually calculate their household expenses to budget and better manage their money. Budgeting estimates the cost of maintaining a home. However, people also calculate household expenses to determine their annual tax returns. Some household expenses can qualify for a tax deduction in the UK. For example, if you work from home and have an office, you can apply for a home office deduction.

While the list of household bills is pretty long, we can group them into several major categories. 

Home Expenses

Examples of home expenses include: 

  • Mortgage or rent 
  • Property taxes
  • Maintenance and repairs
  • Homeowners’ or renters’ insurance 
  • Utilities (gas, electricity, water, trash) 
  • House furnishings and equipment (furniture and small or large appliances) 

Food and Clothing Expenses

Food expenses are the costs of groceries purchased from supermarkets or meals when dining out. Restaurant and school meals are also included in this category. 

Clothing expenses relate to apparel bought for all members of the household. Additionally, services such as dry cleaning, alterations, and repair also count.

Educational expenses such as tutoring, textbooks, personal computers, and stationery are all considered household expenses under child-related costs. If your child goes to a private school, tuition fees should also be included in this category. Also, childcare services, such as hiring a babysitter or daycare, are calculated under child-related household expenses. 

Transportation Expenses

Household bills also involve transportation fees, such as the cost of buying or leasing a vehicle, instalment payments, and insurance. If you don’t own a car, public transportation or cab fares count instead. 

Entertainment Expenses

Costs of leisure activities are also considered household expenses. These include money spent on family vacations and the costs of practising your hobbies. Additionally, nights out to the movies and subscription services are also part of entertainment household expenses. 

No matter how carefully you plan, there will always be some household expenses that can appear out of nowhere. For instance, medical emergencies or natural disasters can cause unanticipated expenses that need to be dealt with immediately. We can separate these bills into another category called unexpected expenses.

The following section explores this category in more detail. 

What Are Unexpected Expenses?

Put simply, unexpected costs come as a total surprise. For instance, some may result from emergency home repairs, insurance spikes, or medical procedures. Likewise, funerals or pet emergencies are a definite surprise to many. They often arise at the most unexpected and critical times, and cannot be easily dismissed.

Young adult paying unexpected bills

In a sense, unexpected expenses arise from external factors that are out of your control. For example, incidents such as natural disasters – hurricanes, earthquakes, and stormy winters – can catch you off guard without any warning. In other words, these expenses truly cannot fit into your monthly budget, and it takes severe and critical planning to prepare for them.

How to Budget for Unexpected Expenses

While it’s nearly impossible to predict the occurrence and timing of emergencies, you can always be prepared for them financially. And when it comes to planning for any financial occurrence, the key always lies with your budget. Here are five ways you can budget for unexpected expenses:

Recognise the Issue

You can start your budgeting path by classifying and anticipating possible unexpected expenses. Although you may not be able to plan for all possible scenarios, you can likely plan for obvious instances such as home repairs, medical emergencies, or vehicle maintenance. Having an idea of potential unexpected financial burdens ahead of time can help mitigate some of the surprises.


Once you have identified common unexpected expenses that may crop up, it is necessary to take a step back and reassess your spending. First, gather your bills and pay stubs over the past few months and review your incoming salary and outgoing spending. This does not necessarily mean there is a mistake within the accounts. Instead, it is an opportunity to review your finances and identify areas where you may be overspending.

As your family grows, the number of different expenses will also increase. Constantly checking your budget can help you identify which spending categories have changed significantly. For instance, you may notice that you’re spending much more on eating out than before and can decide to cook more at home instead to save additional money.

Start Separating

After classifying all your past bills and cash outflows, it is time to determine what goes into the necessities column and what does not. Necessities can also change over time. For example, if you don’t watch television, suspending your streaming subscription can be a good idea. Once you complete this phase, tally up your total expenses and remove the amount from your monthly income.

Start Saving

After identifying necessary expenses, set aside the remaining amount of cash into a savings account. Then, add a separate category of emergency funds to your monthly budget and continue contributing to it from your salary. 

As a general rule, try keeping an amount that would cover your monthly household expenses for six months in your emergency fund. You can also choose to save more if you can. However, make sure to refrain from touching your savings unless extremely necessary.

If you think budgeting and keeping track of your expenses is difficult to do by hand, you can use the help of several mobile budgeting apps instead. Most budgeting apps connect to your financial accounts and automatically organise your finances by categorising different purchases and keeping you updated on your financial goals. Some of these programs may include Emma and MoneyHub.

How to Cover Unexpected Household Expenses

If you come face to face with unexpected expenses, just know many funding options exist to tackle them. From dipping into your emergency savings to applying for a short-term payday loan, you may be able to cover unexpected financial expenses the crop up.

Young adult applying for an online payday loan

Below are some tips on how to deal with unexpected expenses:

Cash Your Emergency Fund

If you’ve built up an emergency fund, it would be the right time to use it for dealing with unexpected expenses. The goal for any sustainable emergency fund is to have at least three times the amount of average household bills per month in the UK, which is roughly around £2,300. But the more you save, the better. 

Remember that you should turn to your buffer only when there’s an absolute necessity. For instance, it might be tempting to ring your emergency cash fund for help when you want to go on a vacation, but if you do it once, it can easily become an unhealthy financial habit. 

Plunge Into Your Savings

If you happen to have your savings tucked away somewhere secure, this can be an optimal solution for any cash-hungry emergency. However, make sure that the money saved is not reserved for other goals. Moreover, make sure you will not be penalised for a cash withdrawal.

It is always better to take cash out of unreserved savings than investments or loans. This is because investments are typically designed to be held for long-term growth.

Apply for an Interest-Free Line of Credit

Some lenders may provide interest-free credit options if you have an unexpected bill to pay. For instance, if your car repair is too costly and the vehicle itself cannot be salvaged, some car dealers will offer 0% interest on a loan for the repair.

Upon careful research, you may also come across opportunities to conduct your home renovations based on interest-free credit products. In any case, you may need to show a good credit rating and a stable source of income to be approved for a line of credit. When looking at credit options, only borrow what you need and what you can afford to pay back.

Borrow From Family

Borrowing from family is usually much cheaper than any other credit option. The stigma of borrowing from Mom and Dad is disappearing. In most cases, your family member may agree to lend you money on flexible repayment terms with no interest rates. 

To formalise borrowing from loved ones, you can sign a loan contract that would show your family that you’re serious about paying their money back. Signing a loan contract with your family can also “legalise” the loan and provide legal protection to them in case you default.

Online Loans

When faced with a financial expense, many searches for a fast and easy cash source that may provide the money within a few days. The Internet has provided access to a variety of lenders and loan products. Today, you can apply for a loan from the comfort of your home and receive a response within minutes.

Online loan products may vary from online payday loans to personal loans and even instalment loans. These options are sometimes available for applicants who have financial difficulties and are looking for suitable loan options to fit their needs.

Quick payday loans provide a smaller amount of cash based on the applicant’s income. Conversely, instalment loans may provide a higher loan amount. Please note that even with a short-term repayment schedule, borrowers should present a steady source of income and a good credit score.

Sum up

Many factors can contribute to an unpredictable financial situation, but unexpected expenses can be the most challenging to manage. Nevertheless, with smart planning and careful preparation, consumers can put these expenses behind them faster.