How to manage unexpected expenses early in the year

Managing my finances

The contents provided on this page are for informational purposes only and do not constitute financial advice. Consider your personal circumstances and objectives before making any financial decisions.

January often feels like a fresh start, but it can also bring unexpected expenses that catch many Australians off guard. Whether it's holiday overspending, back-to-school costs, or surprise bills, these challenges can disrupt your financial plans.

The good news? Managing expenses doesn't have to be overwhelming. With the strategies and tools to help you manage unexpected expenses, you can handle these surprises and make sure you start the year on the right foot!

Common post-holiday unexpected expenses

Many Australians may find January challenging due to a mix of seasonal and situational costs.

Some of the most common ones are:

Post-holiday debt: The festive season can often lead to increased household spending. In December 2024, a study by Canstar estimated Australian credit card spending would surge to $86 billion between November and January.
Back-to-school costs: For parents, January means uniforms, stationery, and fees in preparation for the school year.
Summer activities: From family road trips to beachside outings, the extended summer holidays can lead to additional unexpected expenses.
Unplanned repairs: Appliances, air conditioning, or cars might need fixing after heavy use during both the summer and festive season.
Utility bills: The Australian summer can push up electricity costs, especially with energy prices rising. According to Finder, Aussies are running their air conditioning for up to 5 hours per day during the warmer months, and are expected to spend an extra $190 million nationally as energy prices rise 37% compared to 2022.

Recognising these expenses is the first step to dealing with them effectively.

Tips for managing post-holiday unexpected expenses

1. Build an emergency fund

An emergency fund is your safety net for unplanned costs. If you don't have one yet, it's never too late to start! Even small contributions, like $10 a week, can grow into a buffer for future expenses. Consider setting up a separate savings account for emergencies to keep things organised.

2. Review and adjust your budget

Take a fresh look at your finances and see where you can make adjustments. For example, cutting back on non-essentials like dining out or subscriptions, especially after the festive season, can free up money to cover unexpected bills. Budgeting tools, like the Beforepay app, can make this process easier.

The average Australian saves about $742 a month, so reallocating some of this amount can help manage extra expenses.

3. Use pay advance tools responsibly

When an unexpected expense can't wait, an urgent loan like pay advance might help bridge the gap. Beforepay’s Pay Advance feature can help you access extra funds for only a small fixed fee, providing flexibility for pressing costs. Just remember to borrow only what you need.

4. Prioritise and plan payments

When juggling multiple bills, it's important to prioritise. Focus on critical expenses like rent, utilities, medical and/or school costs. Set reminders for upcoming credit card and loan repayments to help avoid or minimise any fees or interest charges. You could also consider contacting service providers to discuss extensions or flexible payment options if needed.

Helpful tools and resources for managing unexpected expenses

Having the right tools can make managing unexpected expenses less stressful. Here are some options to explore:

Beforepay app: Offers no credit check Pay Advance for quick access to extra funds when you need, as well as easy-to-use budgeting and spending insights tools.
ASIC's MoneySmart Budget Planner: A free resource that can help you organise your income and expenses.
Local programs: Services like the No Interest Loans scheme (NILs) can provide financial assistance for essential costs, if you need. Check for NILs eligibility criteria and terms. Eligibility criteria applies.

Dealing with unexpected expenses early in the year doesn't have to be overwhelming. By using strategies like reviewing your budget, building an emergency fund, and exploring budgeting tools, you can tackle financial surprises with confidence.

Disclaimer: Beforepay Group Ltd, ABN: 63 633 925 505. Beforepay allows eligible customers to access their pay and provides budgeting tools. Beforepay does not provide financial products, financial advice or credit products. The views provided in this article include factual information and the personal opinions of relevant Beforepay staff and do not constitute financial advice. Beforepay and its related bodies corporate make no representation or warranty, express or implied, as to the accuracy, completeness, timeliness or reliability of the contents of this blog post and do not accept any liability for any loss whatsoever arising from the use of this information. Please read our Terms of Service carefully before deciding whether to use any of our services.