Why Does One Unexpected Expense Set Someone Back So Much?

[Lida93]

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An insurance policy is another means of reducing the risk of spending on emergencies. Health, vehicle, fire outbreak, and other forms of insurance policies could assist in times of uncertainty. Paying the premium might be too much for low-income earners. However, those who can afford it could benefit from these policies.

You have to come from a society that the systems are working as it should be before you even think of involving insurance policies into your already hard living standard. In most third world their insurance policies are a fa'cade and this is due to a lack of accountability transparency in the system.

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Having more than one source of income is a good means of protecting your financial base. Someone with more than one stream of income would easily survive when one avenue suffers challenges. Some civil servants in my country have businesses they run to enable them to cope with emergencies. 

It is already difficult having or securing one source of income, talk less of having another one. In many struggling economy, there is difficulty in securing a stable paying job, and the people who are into freelancing offering their services seem not to be earning enough for them to sort their needs and have enough to find another source of income because you need money to find money, and because there is a bulk of people who do not have this money to find money, they are stuck on survival mode. No matter the advice, it is difficult for them to plan and manage emergency situations better, so in those cases, the best someone can do is to try to avoid habits that can land you faster into such emergencies, like an unhealthy lifestyle and then something like keeping late nights in places where you know it is not safe to do so as it is in some other places.

This makes sense and should be carried at heart while struggling towards sustaining multiple income streams because it would be abnormal and of no improved difference having maybe more than one streams of income but with a bad spending habit, troubling fill lifestyle that drains your income , making it difficult for such individual to even have savings. Meanwhile some somewhere with good managerial skill is doing okay with just one income source that doesn't seem enough by the figures. 

[püsür]

Unfortunately, I’m all too familiar with this situation, having experienced it myself in my youth. When you’re trying to achieve things in life, you may need to take risks, and if you try to do something without an emergency fund, you could find yourself in a situation like the one described in the first post, where you run out of money. The way to get past this is quite simple: first and foremost, increase your income and save money; you should at least have an emergency fund. I’ve also observed the following situation: When people are young or on a low income, they can end up taking on far too much unnecessary debt. For example, buying a very expensive car when your income is low. They should buy a cheap and reasonable car first, without too much risk. You can buy an expensive car once your income has increased. But if you buy a car with a large loan and then a problem arises, you could find yourself in a very difficult situation.

[Makus]

Emergencies happen and this is something that you must always be prepared for, these emergencies don't care if you are ready or not. While you are making plans and saving up for what you might need also be prepared to have contingencies. If you only budget the amount of money you need to sort out a particular thing you must might end up getting disappointed when it becomes insignificant due to unforseen circumstances that might come up, it is recommendable to double or triple whatever your savings is aimed for.

[MorganaX]

I learnt my lessons on not saving without accounting for sudden emergencies, the only one I haven't budget is extreme medical emergencies that might live a whole in my pocket. What I normally do is separate my income into 3, the first is for me and Families basic needs like food, rent and all of that, the second most important is my bitcoin investment where I keep a fraction of my income [I do not touch that one no matter the circumstances until I reach my goal], then the last is for emergencies like hospital runs, car break downs, etc. It helps in reducing the pains of this outcomes

[Muba20]

Often times, I have met some people who are of the opinion that diligence is the most important factor when it comes to saving money, I don't quite agree with that principle, diligence and discipline are two requisite factors to saving money because if you have to save money effectively then you have to learn to be disciplined in your spending and make sure you don't spend frivolously but then there is no way you can avoid spending when the reasons or the cause for spending are unavoidable, especially when it has to do with essential needs, such as utilities, medical bills, house rent, transportation, feeding and what have you..
The only way to handle all of these is to grow your streams of  income to the level where you wouldn't be bothered even when spending on all of your needs. If your needs are way bigger than your income then you might still be struggling to meet up with them but if your income is way bigger than your needs then you wouldn't be under any sort of financial pressure.

Having more than one source of income is a good means of protecting your financial base. Someone with more than one stream of income would easily survive when one avenue suffers challenges. Some civil servants in my country have businesses they run to enable them to cope with emergencies. 

It is already difficult having or securing one source of income, talk less of having another one. In many struggling economy, there is difficulty in securing a stable paying job, and the people who are into freelancing offering their services seem not to be earning enough for them to sort their needs and have enough to find another source of income because you need money to find money, and because there is a bulk of people who do not have this money to find money, they are stuck on survival mode. No matter the advice, it is difficult for them to plan and manage emergency situations better, so in those cases, the best someone can do is to try to avoid habits that can land you faster into such emergencies, like an unhealthy lifestyle and then something like keeping late nights in places where you know it is not safe to do so as it is in some other places.

There are many of us who are unable to create multiple sources of income. It becomes difficult for one to meet the needs of one's family with one income. In such a situation, simply asking someone to create a savings or emergency fund is not possible for them. However, even after this, it can be useful in many cases for those who have the habit of saving some money according to their ability.

Even if the income is low, it is possible to gradually save some money by avoiding unnecessary expenses, taking care of your body and moving safely. Because if you stop working due to illness, your income may decrease as well as your expenses may increase. Therefore, it is important not only to think about more income, but also to avoid unnecessary losses by taking small steps accordingly.

[Sarah Jordan]

This is something that happens all the time for people who doesn't have enough spear money to spend when unwanted or unplanned expenses occurs.
It happens to me most of the time and it's so annoying. Budgeting for something and some other thing eats the money it's frustrating as hell by keeping someone in one position.
And you're right on this financial stability is harder than it looks. Mostimes I wonder how people who has enough to spend get to that level cause this pattern is really not helping

[HyperCodexV]

Unfortunately, I’m all too familiar with this situation, having experienced it myself in my youth. When you’re trying to achieve things in life, you may need to take risks, and if you try to do something without an emergency fund, you could find yourself in a situation like the one described in the first post, where you run out of money. The way to get past this is quite simple: first and foremost, increase your income and save money; you should at least have an emergency fund. I’ve also observed the following situation: When people are young or on a low income, they can end up taking on far too much unnecessary debt. For example, buying a very expensive car when your income is low. They should buy a cheap and reasonable car first, without too much risk. You can buy an expensive car once your income has increased. But if you buy a car with a large loan and then a problem arises, you could find yourself in a very difficult situation.

There is that angle of people buying expensive car beyond their financial status that they can't afford but there is also another angle to look at because it is not always about the bad choice, for instance, one can decide to go for an old and cheap car due to not having enough money and all of a sudden the car generates an engine issue and the repair of the car eventually cost more than the money that was used to purchase it in the first place. That can't be classified as him being reckless but just being poor in an unfortunate manner.

[Emeraldo]

Have you ever tried to save money for several months just to get something very important to acquire or accomplish but only for one unexpected expense to take out most of what you have saved, if not all? You have tried hard to limit unnecessary spending, you pay every necessary bill and try to save small whenever you can the suddenly something bad happens, your car breaks down and needs repair, medical bill comes up or something if emergency just happens. Before you know it, you are back to square one, where you started.

This unexpected expenses is what is known as emergency fund which supposed to be kept somewhere for days when we incur unexpected expenditures. As you are saving your money for something important, you must also note to keep momej for days of emergency and this money can be use to solve quick bills you never had a plan for. I have been in a situation when I don't even have any money to spend on emergency bills and I had to borrow to solve that problem. Anything can happen to use at anything and this is why you need to have people around you that can help with urgent fund as loan or dash.

[slapper]

The majority of the world’s population has no savings because they are unable to accumulate any. Another part of the population, which does have savings, considers the first group to be lazy people who are to blame for their own poverty. However, nowadays, many of them are beginning to see the light (when they are dismissed from a well‑paid job because they have been replaced by AI) and finally realize that the reason is not their fault. The employer, meanwhile, tells them the familiar mantra: you’re not good enough.

So, the poor are mostly victims of circumstances, not laziness. Consequently, there’s nothing that can be done about it. The problem lies in the excessive inequality, the concentration of wealth, and the improper distribution. This cannot be solved by individual measures (working three jobs and saving up by straining every effort) - everything will be lost in the next unforeseen circumstance.

What should you do? Whatever you do, it will ultimately be just an empty fuss. This is how people lived in the dark ages after the fall of the Roman Empire, and we are living at the beginning of such a time (the decline of globalism, the corrosion of the global dollar system, wars, crises, and the self‑destruction of capitalism as a whole). Expect a second Renaissance. Since the course of history is accelerating, you won’t have to wait several centuries. Only a few decades.

The poor are victims of a system. But that system is something we built. So we can rebuild it. Saying a problem is structural and saying nothing can be done about it are opposing ideas. If we built a system that hurts the poor, we can change it.

After WWII, the U.S. Had insanely high top tax rates. Strong labor unions, too. Over about three decades, these policies helped compress income inequality. Krugman called this the Great Compression. There was no waiting around for things to change on their own. People banded together and forced change. In the 80s, these policies started to be dismantled. Income inequality started growing again. Choices caused this. And choices will decide what happens next.

The Rome comparison is interesting, but to be honest the real history is pretty brutal. One big reason European peasants saw their wages go up was the Black Death. With so much of the population dead, labor became scarce. The survivors suddenly had a lot more bargaining power over their pay. Is that the kind of reset you're waiting for before a second Renaissance? I think I'll pass.

[r_victory]

I try to be prepared to cover unexpected expenses. I have children, and unforeseen events often happen in emergency situations, especially when they involve medication and health problems. I've never been completely broke, but it's always a setback, and starting over isn't always easy. The cost of living has increased significantly in recent years, and even combining my wife's income, it's still tight, and resorting to credit cards has become a vicious cycle.

[PVequalNRT]

The frustrating part is that you may not have even done anything wrong because sometimes life just happens and while someone else might be able to handle the same expense without even stressing, it or may have to go and borrow money or put other plans on hold just to get through it. This is one reason for me to think that financial stability seems to be harder to achieve than it actually looks. It can’t just be about knowing how to manage your money, the problem sometimes is that there’s is not just enough money left after you have taken care of your daily need.

For those who have managed to build financial stability, what helped you most? Was it increasing your income or you just find another way to protect yourself from unexpected cost?

You can have your life planned out and one unexpected thing will just come and ruined everything for you. There is something I pray for every blessed day and that is good health and long life. There is nothing in life that can bring you down financially in a matter of minute like having a bad health. If you have good health, even if you don't have money you wouldn't be bother. However, the moments you get sick, you be down financially and if you are not lucky, the people around you will be affected too.

Been unhealthy is one thing but the worst of it is been unhealthy without a cure, that thing is a killer. I can't imagine having a good health and woke with cancer. It's hard to see people that have successfully come back from such illness despite with the money.

[Ever-young]

For those who have managed to build financial stability, what helped you most? Was it increasing your income or you just find another way to protect yourself from unexpected cost?

Definitely everything boils down to increasing your income. You can never be too  Careful because to time is guaranteed, you can Only make plans for the future, and those can only work out when nature aligns with hardwork.

There is no better answer than increasing your income because that unexpected debit that destabilized your account balance, done spend it in a restaurant just in one sitting. Just as good building requires a solid foundation and infrastructure and aswell a professional engineer to avoid collapse, do does your account need liquid with solid  financial capacity.

There is only one thing we can have control over, and that is our financial status, because we’ve got nothing on nature, neither can we. Avoid what we can’t see.

[Different patterns]

While we try to achieve financial goal in life, their could be challenges, and barriers as we push towards acheiving it. We save part of our earnings either weekly or monthly, but we cannot actually avoid sudden occurrences, and contingencies we do not plan for. Some times we can even save for emergency, but as someone who is still trying to build yourself financially, some sudden occurrences can tamper with your investment. For instance, in the case of war, if there is a sudden war break out, business ceases to work, their could be displacement or even loss of loved ones, in this case if you are to carry these responsibilities it will be so much heavy on you , and can bring financial set back after trying to handle all these expenses all alone.

It's true that anything can happen at any point in time that might affect your savings and investments but regardless that doesn't mean you shouldn't save at all, it's God that protects and keeps us, not we ourselves but as much as possible keep saving and even if any thing comes up, which is not the reason why you are not saving in the first place, then you have to, in my humble opinion, I will say it's still better compared to going to borrow to settle things you are not planning for in the first place. In all, saving is very much important to tackle both known and unknown unplanned situations.

[Johncarter14us]

Since we know that these occurrences are inevitable and we don’t know when they’ll happen, having an emergency fund in place automatically becomes the most logical thing to do, imagine having an emergency fund in place before starting to save that money, instead using all or most part of that savings, you simply just deep into your emergency fund and sort it out.

My point exactly! Before you start putting money onto your savings you should have emergency money on the side just like Tungulu said because as an adult you must have an emergence of needs arising from further needs and that how life is

As long as you're breathing, eating, moving, etc then you must definitely have an emergency. So instead of having to save first, you can first put down some money for emergencies that would likely emerge in the future.

If you look closely I think you'll notice that one of the many reasons why it could be difficult when emergencies occur is probably due to changes made with looking at the bigger picture like purchasing a car you and forgetting that you have to maintain it or buy petrol. If your car breaks down and you don't normally keep emergency money, you'll find it challenging but owning a car means you should understand that machines too break down.

[Dareo]

While we try to achieve financial goal in life, their could be challenges, and barriers as we push towards acheiving it. We save part of our earnings either weekly or monthly, but we cannot actually avoid sudden occurrences, and contingencies we do not plan for. Some times we can even save for emergency, but as someone who is still trying to build yourself financially, some sudden occurrences can tamper with your investment. For instance, in the case of war, if there is a sudden war break out, business ceases to work, their could be displacement or even loss of loved ones, in this case if you are to carry these responsibilities it will be so much heavy on you , and can bring financial set back after trying to handle all these expenses all alone.

Well, to me the real idea of savings is not to protect oneself from all future troubles, but the ability to make one’s own choice in times of trouble. Many years of savings can be completely ruined due to illnesses or losses in business. But lack of savings only complicates the situation, since you may be forced to take loans. But it is much better to save money for oneself, some savings that are easily available, as well as long term investments, instead of saving everything in one place. The future is unpredictable but there is something one can do to be prepared for it.

[Tungbulu]

My point exactly! Before you start putting money onto your savings you should have emergency money on the side just like Tungulu said because as an adult you must have an emergence of needs arising from further needs and that how life is

Actually you don’t really need to wait first until you’ve successfully built a sizable backup or emergency fund before you can start your savings or investments, this is because you could end up waiting for a long time before you can get started with your investment, so it’s advisable to do both simultaneously. That is to build both your backup funds and your investment at the same time.

Although this may decrease the pace of both of them, but it’s better that way, and the moment you’ve built your backup fund to a reasonable, then you can focus on your investment again…

[Gaza13]

Have you ever tried to save money for several months just to get something very important to acquire or accomplish but only for one unexpected expense to take out most of what you have saved, if not all? You have tried hard to limit unnecessary spending, you pay every necessary bill and try to save small whenever you can the suddenly something bad happens, your car breaks down and needs repair, medical bill comes up or something if emergency just happens. Before you know it, you are back to square one, where you started.

The frustrating part is that you may not have even done anything wrong because sometimes life just happens and while someone else might be able to handle the same expense without even stressing, it or may have to go and borrow money or put other plans on hold just to get through it. This is one reason for me to think that financial stability seems to be harder to achieve than it actually looks. It can’t just be about knowing how to manage your money, the problem sometimes is that there’s is not just enough money left after you have taken care of your daily need.

For those who have managed to build financial stability, what helped you most? Was it increasing your income or you just find another way to protect yourself from unexpected cost?

Naturally, everyone has, at some point, purchased something essential for their daily needs such as a motorcycle or a car. You should be fully aware that buying such an item means being prepared for the costs that will inevitably arise from owning it. Without planning for these expenses, a vehicle which is primarily intended to support your mobility can instead become a burden that drains your savings. Ultimately, the only way to build financial stability is to increase your own income it is this higher income that will be your safeguard.

[gracreavix]

Have you ever tried to save money for several months just to get something very important to acquire or accomplish but only for one unexpected expense to take out most of what you have saved, if not all? You have tried hard to limit unnecessary spending, you pay every necessary bill and try to save small whenever you can the suddenly something bad happens, your car breaks down and needs repair, medical bill comes up or something if emergency just happens. Before you know it, you are back to square one, where you started.

The frustrating part is that you may not have even done anything wrong because sometimes life just happens and while someone else might be able to handle the same expense without even stressing, it or may have to go and borrow money or put other plans on hold just to get through it. This is one reason for me to think that financial stability seems to be harder to achieve than it actually looks. It can’t just be about knowing how to manage your money, the problem sometimes is that there’s is not just enough money left after you have taken care of your daily need.

For those who have managed to build financial stability, what helped you most? Was it increasing your income or you just find another way to protect yourself from unexpected cost?

For someone tying to build his of her financial life from scratch, the first step isn’t savings, especially for a person who earn average or below average income, because 60-85%, if not 90% of that income would be taken by necessary expenses like feeding, rent, taxes etc.

The first step for an average or below average earner to gain financial stability is:
1. Increase his/her cashflow: with the increase of cashflow, you can then be more flexible with segmenting you finance into savings, emergency funds etc.

2. Let your expenses not grow with your income: This is one is a very important but difficult rule to obey. But if you can obey this rule for a substantial amount of time, then you’re one step closer to financial stability.

3. Learn how to grow money (Invest, Invest, Invest): This last one is also very important, because my definition of financial stability is knowing how to grow and multiply the one at hand to earn you more, and not spend it.

[Decimetre]

Have you ever tried to save money for several months just to get something very important to acquire or accomplish but only for one unexpected expense to take out most of what you have saved, if not all? You have tried hard to limit unnecessary spending, you pay every necessary bill and try to save small whenever you can the suddenly something bad happens, your car breaks down and needs repair, medical bill comes up or something if emergency just happens. Before you know it, you are back to square one, where you started.

The frustrating part is that you may not have even done anything wrong because sometimes life just happens and while someone else might be able to handle the same expense without even stressing, it or may have to go and borrow money or put other plans on hold just to get through it. This is one reason for me to think that financial stability seems to be harder to achieve than it actually looks. It can’t just be about knowing how to manage your money, the problem sometimes is that there’s is not just enough money left after you have taken care of your daily need.

For those who have managed to build financial stability, what helped you most? Was it increasing your income or you just find another way to protect yourself from unexpected cost?

For someone tying to build his of her financial life from scratch, the first step isn’t savings, especially for a person who earn average or below average income, because 60-85%, if not 90% of that income would be taken by necessary expenses like feeding, rent, taxes etc.

The first step for an average or below average earner to gain financial stability is:
1. Increase his/her cashflow: with the increase of cashflow, you can then be more flexible with segmenting you finance into savings, emergency funds etc.

2. Let your expenses not grow with your income: This is one is a very important but difficult rule to obey. But if you can obey this rule for a substantial amount of time, then you’re one step closer to financial stability.

3. Learn how to grow money (Invest, Invest, Invest): This last one is also very important, because my definition of financial stability is knowing how to grow and multiply the one at hand to earn you more, and not spend it.

You can be very careful with your finances and you still don't make anything due to emergencies or unforeseen circumstances. Life can be crazy when real life happens. I have seen people lose their entire life earnings just in a minute of natural disaster. You may plan all these, save money in cash or in Bank or buy investments or so. One sick family member can exhaust every amount you have saved because you will not keep money and watch your person to die off while you save your money.

Health is the first wealth. This is why you may be earning the same amount with somebody and remain poor while your colleague is rich and doing well. You can be making investments, when emergency conditions happen, they will still have to go and sell their investment to use and sort the situation on ground.

Learning how to grow money is a good advice also but if a real life situation happens, you may withdraw down to your capital to use and save your self from the moment.

[Sobz]

I try to be prepared to cover unexpected expenses. I have children, and unforeseen events often happen in emergency situations, especially when they involve medication and health problems. I've never been completely broke, but it's always a setback, and starting over isn't always easy. The cost of living has increased significantly in recent years, and even combining my wife's income, it's still tight, and resorting to credit cards has become a vicious cycle.

This is a challenge to most people but I think why it is like this is because of the economy. Everything seems to be very expensive and when one attend to an emergency which they never planned for it just looks as if one is starting all over again. The best thing to do in this difficult time is to be prepared and have enough emergency because when the emergency fund is sufficient and if an emergency happens,  it won't have destabilise one financially.  Many people are not giving much attention to emergency fund, they just want to meet up with other demands .