Dealing with the unexpected

By Peter Kelly

Life has a habit of throwing us a curve ball every now and then – something unexpected appears out of the blue and we have to deal with it. Mark recently wrote about his experiences of having to arrange for his Mum to move into aged care at short notice.

On more than one occasion, I am sure you have found yourself having to deal with something unexpected. If you are unprepared, this can cause stress – both emotionally and financially.

My wife Kerry and I are currently in Sydney. We travelled down from our home in Brisbane to attend a four-day seminar and decided to add a couple of extra days to catch up with some old friends.

On the first day, Kerry mentioned she had a bit of an ache in one of her back teeth. Months ago, her dentist said he would need to replace a rather large previous filling with a crown, but at the time there was no urgency.

Like most things in life, our body doesn’t take a great deal of notice about what time of day it is or what our diary might look like. If the body reacts to something, it will do so when it wants to, and often at the most inconvenient time.

On Sunday morning – it always happens on a Sunday! – Kerry had a little more pain and she was determined to attend the last day of the seminar! A couple of painkillers throughout the day eased the problem at least[1].

We got through Sunday and first thing Monday morning, after a little ‘googling’ (is that really a word?) we found a nearby dental surgery who had someone who could look at Kerry’s problem tooth that morning. By early afternoon the problem had been fixed with a brand-new crown – just before the gum around the tooth became infected.

But dentists don’t come cheap, do they?

Kerry was quoted just on $1,800 for the job. I know crowns are expensive, but a bit of quick googling suggested that this figure was probably in the ‘normal’ range, albeit at the higher end.

Fortunately, we have health insurance and that covered about 40% of the cost. But it still left us with having to find a lazy $1,000 to cover the difference!

So, how did we cover this unexpected expense – credit card, zipMoney, sell the kids?

My employer pays me monthly but out of habit, I like to be paid fortnightly.

I arrange for my monthly pay to be deposited into a separate bank account and then each fortnight, amounts are automatically transferred from that account to cover regular bills, living expenses, discretionary spending, and emergencies. Kerry and I keep a separate bank account just for emergencies – a trip to Bali for a friend’s ‘destination wedding’ isn’t an emergency but urgent dental treatment is.

Our emergency account has gradually built up over time so when it came time to have to find  $1,000 to pay the dentist, the money was there.

And the entire episode was remarkably stress and pain free – well for me at least – I wasn’t in the dentist’s chair!

So, what is the lesson that comes from this little ‘curveball’ example?

Living within a budget that includes putting a little money aside on a regular basis for unexpected expenses seems to make a lot of sense.

Some say that an ideal emergency account should be sufficient to cover 2 – 3 months of living expenses. This would certainly cover contingencies like getting the car repaired so you can get to work, paying for unexpected medical treatment, and covering living costs in the event of a job loss. While this is aspirational, even having a $1,000 set aside could make the world of difference when an unexpected expense arises.

Having money available to cover emergencies, and not having to rely on credit cards or even zipMoney (19.9% interest + a service fee!) seems to me to be a more financially savvy way to go.

What do you think? Please feel free to provide feedback in the comments box.

[1] This is not medical advice. As they say, if pain persists, seek medical attention!

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