Plan for Unexpected Expenses: Average Cost of Emergencies

Unexpected expenses could cost you a pretty penny.

Emergencies can happen at any time and when they do, they could put a strain on your finances if you’re not prepared for them. In our recent survey, 36% of respondents reported unexpected expenses as the primary challenge that got in the way of their 2023 financial goals.

But if you don’t know how much to budget, setting a goal for your emergency savings is tough. Let’s look at the average costs of emergency expenses and how to prepare for them.

Key Takeaways

• Planning for emergencies could spare you stress and keep you from taking on more debt.

• Opening a dedicated emergency fund could help prepare your finances for unexpected situations.

• With proper planning, unexpected expenses could be easily handled, managed, and paid for.

Prepare Your Finances for Unexpected Expenses

There are a few things you could do to prepare for unexpected expenses so they don’t take you by surprise.

• Build an emergency fund: Having money saved for longer-term emergencies, like losing your job, is a good idea. Consider opening a dedicated savings account for your emergency fund so you’re less tempted to use the money for other things.

• Set up a rainy-day fund: A rainy day fund is meant for smaller unexpected costs like car repairs. Like your emergency fund, keeping your rainy day fund in a separate savings account may help you avoid relying on your emergency fund if something pops up.

• Set up a budget: Tracking your spending and creating a budget could help you save more aggressively by making you aware of where your money is going.

• Invest in insurance: Having enough health insurance, home insurance, pet insurance, and car insurance could help reduce your out-of-pocket expenses during an emergency.

Unexpected Expenses: Examples and Average Costs

As we mentioned, unexpected expenses could be minor, like a car repair, or major, like medical care. Here are some of the most common types of emergencies that Americans face each year and what they cost on average.

Medical Emergencies

Even with health insurance, visits to the ER or specialty doctors add up—copays, deductibles, and time away from work could all impact your budget.

Let’s take a look at the average costs of common medical emergencies.

• Emergency room visit: The average ER trip costs between $2,400 and $2,600, assuming you have insurance.¹ If you don’t or your insurance doesn’t cover the visit, your bill could be more.

• Hospitalization: If your injuries or medical condition is severe, you may need to spend time in the hospital. Hospital stays cost $2,883 per day on average.² The more complicated your treatments are and the more medications you need, the higher your costs could be.

Building your savings and setting money aside in an emergency fund could help you prepare for unexpected medical costs. You may also choose to save funds in a flexible spending account or health savings account if they are offered through your employer.

Car Repairs

Even if you stay on top of routine tune-ups and oil changes, cars still break down. Here are some of the most common car repairs and their average costs.

• Check engine lights: Check engine lights come on for many reasons, but most people spend about $390 to get the issue diagnosed and repaired.³

• Replacing brakes: Brakes are expensive to replace, and you can’t just replace one. Usually, you need to replace both brakes on an axel at the same time. On average, they cost between $250 and $400 per axel.⁴

• Fixing collision damage: Minor collision damage like fixing a broken seatbelt typically costs around $150. While most people have car insurance, you may have a high deductible, which means you need to have at least that much cash on hand before the insurance starts covering costs.⁵

• Replacing transmission: If your transmission goes, you’re looking at another costly repair. Depending on the type of transmission in your car, you could spend anywhere from $3,000 to $9,000 on this fix.⁶

The best way to reduce the cost of repairs is to take care of regular maintenance on time. Your mechanic can help you create a schedule to fit your vehicle’s requirements.

If you’re worried about collision damage, speak with your insurance provider to find the right policy for your needs.

Loss of a Family Member

Losing a family member is one of the most painful experiences. On top of grieving, you need to cover the cost of the funeral to honor their memory.

The average funeral costs around $10,000, but many people leave behind medical bills or other expenses when they pass, so you may need to have more saved.⁷

Additionally, when a family member passes away, handling their estate could be costly if they don’t have their affairs in order.⁸ Encourage those you love to create a will and build an estate plan as soon as possible. And if you don’t have one yourself, work with an estate planning attorney to put one together.

Having end of life documents prepared ahead of time may save your loved ones money, but more importantly, it could also reduce the stress they experience during an already difficult time.

Home Repairs

When you rent your home, your landlord is responsible for routine maintenance and repairs. But when you own your home, you have to foot the bill. Those maintenance and repair costs could add up fast.

Angi’s 2023 State of Home Spending Report found that home maintenance spending averaged $2,458 and emergency spending was approximately $1,667.⁹ Depending on your situation, the bill may be even higher. Here are some average costs for emergency home repairs.

• Electrical issues: Electrical repairs could cost anywhere from $280 for minor repairs to $4,000+ for major repairs.¹⁰

• Appliance repair: Broken appliances are typically best repaired by a licensed professional. While the cost depends on the appliance you’re fixing, you could spend between $107 and $249 per appliance.¹¹ If you end up needing to replace the appliance, your costs may reach into the thousands.

• Water damage: Water damage from leaks, burst pipes, and even damaged appliances like your washing machine or dishwasher are expensive to repair. The more extensive the damage is, the more costly the repairs could be. On average, you could expect to spend between $1,344 to $6,059.¹²

One of the best ways to help protect yourself and reduce the risk of emergency expenses taking a toll on your wallet is to keep up with regular maintenance. Routine maintenance typically costs less than major repairs, saving you money in the long run.

Pet Emergencies

Like human medical care, veterinary care for your furry family members can really add up. And when you’re dealing with a medical emergency for your dog, cat, horse, or ferret, you usually need to pay for care upfront.

Here are a few common emergency veterinary situations and their average costs.¹³

• X-rays and Ultrasounds: If your dog is unwell and needs an x-ray or ultrasound for treatment, it can be $150 - $600 for just those diagnostic tools, let along for the treatment.

• Wound treatments: Treatments for cuts, punctures, and other wounds range from $800 to $2,500.

• Emergency surgery: Planned surgeries may cost over $1,000 but when you’re sending your pet into emergency surgery, you could end up paying $1,500 to $5,000 for the surgery alone. Medications, IVs, and other care may cost more.

Pet insurance could be an easy way to reduce your risk of most vet expenses and may keep you from going into debt if your pet experiences a medical emergency.

Job Loss and Unemployment

Job loss and unemployment are always a risk in any industry, even when the labor market is stable. Layoffs were up 198% in the first three quarters of 2023, with some industries continuing to see volatility in 2024.¹⁴

Losing your job could make it difficult to cover your regular expenses. And with the average job hunt lasting between three and six months for most job seekers, it often means going without your regular income for an extended time.

A good way to help protect yourself is to build your savings while you’re working. Experts recommend having between three and six months of living expenses set aside to help you get through an unemployment period.

Final Thoughts

Unexpected expenses may take a toll on your stress levels and your bottom line. But if you prepare for them ahead of time and start setting money aside now, you’re helping set yourself up for success in the future.