Preparing For Spending Shocks

“Spending Shocks” are large, irregular expenses. Spending shocks are the #1 reasons why budgets end up abandoned, and being prepared for large spending shocks is the best thing you can do to keep your personal finances healthy.

There are two types of spending shocks: Budgetable and Unbudgetable.

Budgetable Spending Shocks

A “Budgeted” spending shock is a big expense you might only see once or twice a year, but you know it is coming well in advance. This includes things like buying gifts for birthdays or holidays, regular trips to the dentist, and shopping for school supplies.

Unbudgetable Spending Shocks

These are unplanned expenses that you do not see coming. This includes things like car repairs, fixing a broken computer, or replacing lost/stolen items. Unbudgeted spending shocks can be devastating if you are not prepared, since they also tend to be very expensive.

Budget Game Tip: Be expected to get some Spending Shocks around May, August, and December! There are also some pretty serious Unbudgeted Shocks that can come up at any time through the game. The biggest shock you can ever encounter in the game is $800.

Coping With Spending Shocks

There are two ways you can cope with a major unexpected expense:

Put it on your Credit Card. Don’t be too afraid of using your credit card to cover cash shortages, so long as you can pay it off within 45 days. Paying a bit of interest isn’t the end of the world, but you won’t be doing your Credit Score any favors.
Borrow from your Emergency Fund: Your Emergency Fund is for emergencies, so be very careful when you take money out. Taking money out of your emergency fund will seriously hurt your Game Score (until you refill it), and almost always will cause you to miss your Savings Goal. However, if you’re already looking at serious credit card debt, this might be a safer option.

Now that you know a bit more about building up an Emergency Fund, close this window to continue the game!

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