5 'Life Happens' Moments and How to Financially Prepare for Them

by Brian Reed

Just when you think you're on the right track financially, it happens.

Your water heater breaks, you end up in a fender bender or your niece decides to have a destination wedding in the Caribbean. No matter how much you plan, unexpected expenses always pop up.

But, that doesn't mean you have to throw your budget out the window.

Here are five often overlooked expenses that can severely damage your financial plan, and ways to be sure they don't:

1.Health Expenses

Tens of millions of Americans lack health insurance coverage, and even those with good insurance can be financially devastated by an expensive surgery, accident or sudden illness.

A minor fender bender can send someone to the emergency room, where the average bill is easily $1,000 or more for someone who is uninsured. With insurance, depending on your plan, you might still be required to pay the full cost out of pocket before the insurance company pays any part of the bill.

How to Prepare:

Health insurance may seem like something you can skip to save money, but a bankrupting emergency could cost you thousands or even tens of thousands. If your employer doesn't offer a health insurance plan, consider purchasing your own coverage through comparative online sites like www.ehealthinsurance.com and www.healthinsurance.com.

Need to free up money for health insurance? [Try these 25 Ways to Save Hundreds on Your Monthly Expenses.]

2. Major Home Repairs

What happens when it's finally time for a new roof, air conditioner or furnace? The cost of a new air conditioner and furnace could cost more than $6,000 -- and replacing a roof can cost twice as much or more depending on the size of your home.

How to Prepare:

Experts suggest setting aside 1% to 3% of your home's value to be ready for regular or surprise repairs. That means for every $100,000 your home is worth, you should set aside $1,000 to $3,000 each year to be ready.

Doing routine home maintenance (or hiring specialist home service providers) can help you catch problems before they become expensive emergencies. Check for proper drainage around your house to prevent foundation problems and keep your trees trimmed to keep limbs from falling or scraping against the roof. Service your heating and cooling system annually to make sure it is in top running shape and clean those air filters. Doing an online search for "home maintenance checklist" can come in handy, too.

3. Weddings and Gifts

Who knew being a friend would cost so much? An often overlooked expense for people in their 20s and 30s is the cost of weddings, parties and milestone gifts.

Bachelor/bachelorette parties, wedding attire, graduations, baby showers and other gifts can really add up quickly. A domestic flight, two nights in a hotel with meals and a $50 wedding gift can quickly become thousand-dollar excursions.

How to Prepare:

If a close friend seems close to tying the knot, find out if they have any ideas about how or where they'll do it. Do they dream of a destination wedding in Hawaii or are they planning to get married locally, where costs would be dramatically lower?

Hopefully, you'll at least have a few months to budget. It might mean holding off on a vacation you had planned or cutting back on your entertainment for a few months to prepare. If you can't afford the destination wedding, maybe you can afford a special gift instead.

When it comes to graduations and baby showers, you could always offer to host a small party at your home, and ask friends to contribute food and beverages.

4. New Family Members

Children: sometimes with all the planning and execution, they come on their own schedule. Those little bundles of joy can be quite costly.

The average cost of a birth is around $10,000, and that is without any complications. Cesarean sections and some common complications can make costs balloon to more than $20,000. But before all that, don't forget all of the prenatal care -- expecting mothers visit their ob-gyn an average of 14 times during their pregnancy. Add laboratory blood work and ultrasounds to the copay, and these visits will typically cost around $133 each.

How to Prepare:

Open and honest communication with your partner is vital here. If you're planning to have a child or are even considering it, check your insurance to see what is covered and if you need to increase coverage.

Fortunately, you will have a little time to prepare, but an unplanned pregnancy might mean some dramatic budget adjustments. Remember, if both parents work, at least one of you will need to take some time off from work, which requires savings.

[Sometimes staying home is a great financial option! 5 Reasons One Parent Should Stay at Home.]

5. A Dead Computer

If we haven't done it ourselves, we all know someone who has spilled water all over their keyboard or dropped their laptop trying to drink their cappuccino while talking on their cell phone.

We rely on our computers for work, school and entertainment. If something catastrophic happens -- like a hard drive failure, screen damage or even theft -- we can barely get through another day without needing a new one. A new computer will set you back $800 to $2,000, and that's before you've bought the accessories and software.

How to Prepare:

If you need your personal computer or laptop for work, you should be prepared to replace it every three years. That means budgeting to save around $50 to $60 a month. If after a year, your computer dies, you will already have between $600 and $720 saved, meaning it won't be such a budget buster to pay for the new computer. Some companies offer insurance plans for computers that cover certain damages and/or theft. You could always opt for a used or refurbished model as a backup.

Finally, remember to back up those so you won't need a costly data recovery. External hard drives are inexpensive and can automatically sync with your computer. You can also save files to the cloud, such as through Google Docs or Amazon Simple Storage Service, where they can be accessed from anywhere.

Even the strictest of savers can be in for a surprise when something breaks or a close friend decides to have a wedding overseas. Preventative maintenance, whether for your home or your health, can go a long way toward avoiding expensive emergencies.

But if all else fails, you may also consider taking out a low-interest personal loan to help you get through a crunch. For those with good credit, personal loans can offer much lower annual percentage rates (APRs) than credit cards, saving you hundreds of thousands of dollars in interest charges over time. And unlike home equity loans, you won't risk losing your home if you miss some payments, as we talk about in 4 Reasons to Get a Personal Loan.

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