The perils of unexpected recurring expenses

Published: March 4, 2014 at 9:27 am

Last Updated on December 18, 2021 at 10:41 pm

What is the worst that can happen to us from a financial standpoint?

  • Life insurance will take care of our family upon our death provided, it is adequate and kept in force – check your cover here.
  • Health insurance will take of a family member’s hospitalization provided, it is enhanced often enough to keep pace with inflation.
  • A large enough emergency fund should handle any sudden expense from a car breakdown to non-medical expenses during hospitalisation.
  • Accident insurance are available for disability management .. to a certain extent (most covers are too low)
  • Critical illness insurance is available, in principle, for CI management to a certain extent (complex policy wordings plus typically low cover)
  • We have a car insurance, two-wheeler insurance, home insurance etc.
  • We invest each month for our long term financial goals and save for our short term goals.
  • We stay off bad debt, understand the role of inflation on a home loan EMI and keep it manageable.
  • Each month, our salary accounts for monthly expenses, EMI, investments, savings and a small contribution to the emergency fund.

So what is the worst that can happen from a financial standpoint. If most of the above points are covered in one way or the other, a person would in charge of his/her finances.

What is the worst that can happen to topple such an individual’s life?

When it comes to emergency expenses, a scenario keeps recurring in my mind.


Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

Shops that stock expensive crystalware have a simple policy – “good to touch, yours if dropped!”.

So if I accidentally drop crystalware I will feel terrible because it is an unexpected and unnecessary expense. A car breakdown is an unexpected (not really!) but a necessary emergency.

While what is necessary/unnecessary is subjective (how do you classify a trekking accident?), the nature of the expense is usually objective.

If we drop crystalware I pay (a large!) one-time fee.

If we have an accident, get hospitalized and take a few months to recover, most of the hospitalization expenses will be paid by the insurer (either immediately or later).

Recovery at home represents unexpected recurring expenses.  This is the worse that can happen from a financial standpoint.

unexpected recurring expenses
Photo Credit: Tony Hisgett (Flickr)

Imagine this scenario.

A couple utilises 30% of their take-home pay for monthly expenses. Another 30% is allocated for investments towards their long term goals, 30% towards home loan EMI and the rest 10% towards miscellaneous expenses or is added to the emergency fund. They have enough life and health insurance cover.

Every paisa earned is accounted for and budgeted. Sounds perfect!

How will this couple handle unexpected recurring expenses?

There is a limit to how much monthly expenses can be reduced.

Reducing the EMI is pretty much impossible.

The only option is to utilize the ‘left-over’ 10% and if the expenses are huge, reduce their investments.

I can think of no other way to handle this issue.

Unexpected one-time expenses leave a big hole in the pocket. The hole will disappear soon.

Unexpected recurring expenses is like an active mine – the hole remains fresh month after month.

What is the way out?

Nothing can be done after the recurring expense is incurred.

The only way out is to start investing early, aware of the possibility of such expenses latter in life.

This is the only reason I have managed to hold my head above water as I manage unexpected recurring expenses after my mom fell and broke her thigh bone: Cashless Mediclaim: A Second Person Narrative

A few weeks ago as I sat down looking at my mother in a hospital bed recovering from surgery the long term implications of her fracture were becoming clear to me.

She would be confined to a bed (if not bed-ridded) for at least a couple of weeks more. She will need paid-assistance in her day-to-day activities. She will need to be given physiotherapy. She would need diapers, wipes, gloves etc. There would also be a few miscellaneous expenses.

All this implies an outgo of close to Rs. 1000 a day. I have no other option, but to decrease my retirement investments and stop investing for my sons marriage.

Thankfully it is not as bad as it sounds.  I am already investing way ahead of my retirement investment schedule (monthly investments that increase each year at some rate):  The year-end personal financial audit

I am thankful that I will be able to continue investing for my sons education as per schedule.

A decrease in retirement investments means a delay in financial freedom by at least 5 years or so.  I am not too worried about that as I am an academic, and I love my job.

What if the same happens to someone in a corporate job? A job that the person hates?

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.

  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter with the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision-making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it's content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)