OD #11 - Stop Pretending These Expenses Are ‘Unexpected'

We tackle the concept of "unexpected" bills that aren't actually unexpected at all, but rather irregular expenses we can and should plan for to avoid financial stress and debt.

• One in three Australians couldn't cover a $500 emergency without borrowing money
• The average Australian household spends over $1,200 annually on "unexpected" bills
• Car costs average $10,000 per year—nearly $200 weekly for registration, insurance, servicing, and fuel
• Health expenses average $4,000 per year for the typical Australian household
• Homeowners spend approximately $5,000 annually on repairs and maintenance
• Australians waste $660 yearly on unused subscriptions
• The average household spends $1,200 on Christmas each year
• Almost half of Australians have less than $3,000 in savings
• Creating dedicated savings "buckets" for each category transforms financial stress into confidence
• Automating just $20 weekly builds over $1,000 in 12 months for irregular expenses

Grab a notebook, write down five irregular expenses that have blindsided you in the past, then set up a dedicated fund for just one of them. Automate $10-20 weekly transfers to build your fund, then gradually add more categories over time to go from reactive to proactive with your finances.

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Disclaimer:
The information provided in this podcast is general in nature and does not constitute personal financial advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Asset Road Pty Ltd recommends y

Chapters

• 0:00 The Problem with Unexpected Bills
• 3:22 Why Planning for Expenses Matters
• 5:46 Car Costs: The Silent Budget Killer
• 7:55 Medical, Home and Subscription Expenses
• 12:21 Life Events and Emergency Fund
• 15:36 Automating Savings and Mindset Shift
• 19:43 Challenge and Final Thoughts

Transcript

Speaker 1: 0:00

Did you know that one in three Australians couldn't cover a $500 emergency without borrowing money, or that the average household spends over $1.2k a year on unexpected bills? The truth is, they're not unexpected at all. They're just irregular Car rego, dentist visits, christmas home repairs. They're guaranteed to happen, but most people never prepare for them. In this week's episode, I'm breaking down the exact expenses you should be saving for and how to set up simple funds that turn panic into peace of mind. Stop letting bills control you. Start preparing for them.

Speaker 1: 0:50

Welcome back to another episode of the Finance Bible Podcast, zeke here and your co-host, oscar. But before we get into it, please note that nothing in this podcast should ever be considered as personal financial advice. Of course, if that is what you are seeking, reach out. We'll get you in touch with the correct professionals. Get the job done properly. Sit back, relax and enjoy the show. Let's get into it.

Speaker 1: 1:17

Let me ask you something. When was the last time an unexpected bill absolutely ruined your week? Maybe your car rego landed in your inbox and you weren't ready for it. Maybe your washing machine stopped working right when you thought you were on top of your budget. Or maybe Christmas came around pretty quick and you swore you'd only spend a few hundred bucks, but somehow you ended up, you know, two to $3,000 down. Here's the truth. Studies show one in three Australians would not be able to cover a $500 emergency without borrowing money from someone or using a credit card One in three people, which is ridiculous. And the thing is, it's not because they're reckless, it's because most of us don't plan for the irregular expenses that we know are coming.

Speaker 1: 2:06

So today, this episode's all about breaking down the expenses that you must be saving for if you want to stop living in that endless cycle of financial stress. We'll talk about the most important costs and probably the most common costs, such as your car, if you have a car. Your car costs your medical bills, home repairs, all your subscriptions in a world where everyone is obsessed with technology and Netflix and Stan, all those streaming services, but also life events and, of course, the all-important emergency fund, which we've spoken about many times. So I'm hoping, if you've been listening to this for three, four years, hopefully by now you have built an emergency fund for these reasons. And here's the thing Once you understand these categories and start saving for them, money stops being scary. You'll pay those bills with confidence, not with fear, and you can move on in life. It's as simple as that. And it's such a simple shift, and when you do shift it and you actually save these events, life becomes a lot easier for yourself. So, number one, what we're going to talk about is why planning for expenses actually matters.

Speaker 1: 3:22

Here's the problem with most budgets they're too short-sighted. You might be budgeting for a week, but it's not consistent. You might know for a fact that you've overspent the last couple of months and you put a budget together and, yeah, you might have a couple good weeks, but then all of a sudden, you get invited to a friend's drinks and then you get a bit carried away, and then next weekend it happens again. Then you go out for dinner and then your friends want to go on a trip. Then, all of a sudden, because you've got a credit card, you haven't really thought about the ramifications and you've just spent a lot of money that you do not have. And then your bills come. Your car rego is due next week and then all of a sudden it's creeping up and this big snowball of debt has begun and now you need to start paying it down. So, as I mentioned, most people only plan for what's due this week or this month. So you're talking about rent, groceries, utilities.

Speaker 1: 4:13

The problem is, life does not run on a monthly cycle. According to Finder, the average Australian forks out more than 1.2k a year on unexpected bills, and 60% of that and 60% admit they put those costs straight on a credit card because they do not have the money set aside. And the issue is if you don't have a credit card, well, you are not in luck, because how are you going to pay for this bill If you're not even putting money aside in your savings? This is where people borrow money from loved ones and friends, and it can get a bit messy. So just think about it. For a second $1,000 or $1.2,000, that could be a holiday, an interstate holiday could be to put towards investment or some shares or your extra mortgage repayments, but instead, because people don't plan ahead, it becomes debt and it's 1.2 grand that you've just basically wasted and given away. If you reframe it, it can change the way you look at things. Here's the reframe. None of these are truly unexpected, they're just irregular, and if something is irregular but guaranteed, then you can, and you also should, prepare for it.

Speaker 1: 5:27

Now the categories that you must save for can vary from individual to individual, based on if you have a car, if you have TV subscriptions. But this is just based on the average Australian, where a lot of individuals do have cars and subscriptions. So, number one we'll talk about car costs. So cars are one of the biggest silent budget killers. It's pretty obvious People treat car expenses like surprises, which is crazy, because when you buy a car, you should know that you're going to pay your rego, your insurance, your petrol, your diesel on a regular basis.

Speaker 1: 6:03

But, yeah, people treat these as surprises, as well as their car insurance and servicing. But they're all predictable as surprises. Literally is the sun coming up. So before you get a car, if you're thinking about getting a car, you need to calculate to your month or your fortnight or the week that you get paid on your pay cycle, how much to put aside so that when your car rego or your insurance or your service comes up, you can put money into it, as opposed to using a credit card or borrowing money that you don't have.

Speaker 1: 6:36

Because here's a statistic the average Australian spends over 10 grand a year of just owning and running a car. That's your fuel, your rego, your servicing, your insurance, everything together and if you break the damn weekly, it's nearly $200 a week. So just on that alone and let's say 10 grand is the average so you might be below that or a little bit above it, but if that's you, then it's simple. You need to put aside at least $200 a week into a car account to cover you in case anything does happen to your car. So why do we act shocked when the rego bill comes or when the mechanic tells us you need new brakes? You subconsciously know it's coming, so save for it. Even ten dollars, twenty dollars a week into a car fund helps. When you need to pay for these expenses, the more you put it off if you can't afford it. You know your car is slowly breaking in a way, because if you need a service ASAP and then all of a sudden you can't afford it for 12 months, well you're driving a car that's overdue 12 months for a service and depending what car you have and how old it is, this could literally make or break your car. So really think about it.

Speaker 1: 7:52

The second category that you must save for is medical and health costs. According to the ABS, the average Australian household spends about four grand a year on health expenses. That includes prescriptions, gp visits, dentist bills, physios, health insurance gaps, and you might think, if you can't afford these checkups, that skipping the dentist seems like saving money until it's not until you need to get a filling, so someone might avoid a $200 checkup and then all of a sudden they need the $2,000 root canal. So these medical and health costs are so important, especially when we're in a world where, as our last episode Zeke was talking about, had junk foods now cheaper than actual health foods like fruit and veggies, because everyone is going to the junk food. So this is where your health becomes so important to get regular checkups. Health costs are not inevitable, they're not emergencies, they're life, they're part of life. You need to get checked up when you're not feeling well, when you need antibiotics, when you need to go to the dentist. If you've got a sore knee from sport, go to the physio. You need to do it. It is literally non-negotiable.

Speaker 1: 9:03

The third category are home expenses, because they are brutal, because they can often come out of nowhere. This is for individuals who have a home. A lot of Australians now are renting because the barrier to entry is so high at the moment, with the cost of living, depending where you're wanting to buy. So a lot of individuals are rentvesting, which we love. But yeah, even when you're rentvesting with your investment property, some home expenses may come up. But if you're renting and you don't have an investment, this might not apply to you. So for the homeowners, research shows the average homeowner spends around five grand a year just on repairs for their house. So this is your hot water system, your roof might be leaking, you might have a broken air con unit. The list can go on. Literally can be anything. And for renters, let's just put you guys into the category. Might look a little bit different, but we might be talking about furniture replacement, moving fees if you're moving, rentals, contents insurance, but yeah, they're just as real as the homeowners spending the five grand. This is not optional. So when these expenses come up, let's say your hot water system's broken. This is not an optional thing to decide if you're going to fix it or not. You want to fix it, you need to fix it. So this is why home expenses deserves its own fund. You need to have a fund for home expenses deserves its own fund. You need to have a fund for home expenses if you're a homeowner and if you're a renter who wants to move every 12 months, or even buying new furniture, it's not silly to have your own account as well.

Speaker 1: 10:48

Fourth category annual subscriptions and memberships. These fly under the radar, but they add up very quickly. You might see in your direct debits coming out every month or fortnightly, $15, $20. And at the time that's easy, that's not much happening at all. But if you've got five, six, seven, eight subscriptions individually with $15, all of a sudden you've got a hefty amount of subscriptions. So we're talking about gym memberships, netflix, spotify, amazon Prime, even software and professional memberships.

Speaker 1: 11:17

On average, australians spend $660 a year on unused subscriptions alone Unused. So these are subscriptions that you're forgetting you even have. For me, I found out the other week that I have still subscribed to hey you. I used to love watching a few shows on hey you, but I haven't watched that for probably 12 months. So I then yeah, I was caught out by myself had to cancel this subscription. But that just shows that they do go under the radar and I might have more subscriptions that I'm not aware of, hence why I keep looking when I've got free time. But $660 a year on unused subscriptions is ridiculous. So what I've been doing in the past and what might help you is put them in a calendar, add them to your budget and either cancel what you don't use or plan for what you do. It's as simple as that.

Speaker 1: 12:09

Number five this is something we spoke about at the start of the year I think it was a January episode that I recorded and it's about life events, presents, christmas presents, birthday presents. They're not surprises For the individuals that you normally get presents for. You know that their birthday happens once a year. You know Christmas is once a year. So, yeah, you need to plan ahead for these things.

Speaker 1: 12:37

The average Aussie household spends around 1.2K on Christmas each year, as mentioned before. That's including, you know, your gifts, your food, your travel, but every December, millions of people panic, max out their credit cards literally and spend the next three months paying it off. So you need to figure out, based on what you normally spend per person in terms of individual's presents or Christmas presents. How much is it? If it's $1,000 for the whole year, you need to put aside $20 a week, give or take. If it's $2,000, you normally put aside, you need to calculate $38 to $40 a week for the whole year. But you need to reverse calculate and put money aside. So when you've got your account, let's say it's your Christmas account, and when Christmas comes you might have the 1.2K already in there or the two grand. So when you're actually spending the money it doesn't hurt you and it doesn't actually feel like you're using money that you have because you have planned for this. You knew that this was coming, so it's just reverse calculation. So this year, christmas time if you don't already have this figure out how much money you are spending on gifts and then, as soon as January turns around every week, put money aside to calculate up to that total amount. So when Christmas comes next year you are ready to go. You're all good. That's a really important one.

Speaker 1: 14:09

The last one of this topic is obviously the emergency fund. This is the biggest one in my opinion, but almost half of Australians have less than $3,000 in savings, which I don't actually understand how this can happen. Obviously, some people put their money into an offset account or into a property or some investments, so I'm assuming this statistic is also putting in place that some people have investments, but you need money in your savings for everyday emergencies. Let's say you have a dog and something happens to him. They get sick and you need to go to the emergency 24 hour vet. You're probably spending at least two to three grand alone on surgery, especially if you don't have insurance. You're forking out a little bit more. So that means, let's say you only have $3,000. If you have to go to the emergency vet or the hospital, that one visit wipes out your whole emergency fund. So you need more than $3,000 in your emergency.

Speaker 1: 15:13

Generally, the goal is three to six months of your living expenses, but don't let that number scare you. Three to six months of your living expenses, but don't let that number scare you. Even $3,000, $4,000 over time, that will give you breathing room, but whatever gives you peace of mind, that's the number you want to hit. So the question is and it's always been brought up how do you actually save for these? So how do you do it? Think of them as little buckets of money for each category we just talked about. People who love personal finance books have probably read Scott Pape's the Barefoot Investor back in the day. He talked about little buckets as well. That's how I got kind of into it the ING accounts.

Speaker 1: 15:57

But the trick to all of this and to saving is automation. So automate it, set up automatic transfers each week. You might want to put $10 here, $20 there. It doesn't feel like much, but over time it definitely does grow and you're not even thinking about it. You just need to make sure that your money from your pay goes into the right account and you've set it up accordingly. If you save just $20 a week into one of these funds, you'll have over $1,000 in 12 months. Double it to $40 a week and that's two grand. That's a car, rego, your dentist and your Christmas cupboard without a single cent of debt when you break it down. It is so simple. It is so simple, so easy and so time efficient and just makes life a lot easier and simpler for yourself.

Speaker 1: 16:46

The main issue that we face as a country and as a society, with the increased amounts of social media use and just doom scrolling and a bit of brain rotting activities, is the shift of your mindset. That's the most important thing. And if you can shift your mindset to this and do it accordingly, that you're excited to actually put money aside and you're excited to hit savings goals and you kind of think of it as a game, that's where you are prepared, that's where it becomes really enjoyable and you grow not just individually but financially, because that's how it starts. I remember when I started really kind of getting into the money side of things let's say it was just during COVID or just after COVID I was loving it putting money aside and seeing the bank account move up per $1,000. It started $1,000, $2,000, kept going up to $10,000. And the numbers grew. And then, when the numbers grew, you had a new goal you wanted to hit and when you hit that goal you wanted to go again. And then after that you wanted to use that money to invest into something else.

Speaker 1: 18:00

So shift your mindset into that and once you shift it, life gets a lot easier and it's fun. So you're saving for irregular expenses won't stop the expenses from happening. That's the thing. But instead of feeling blindsided, you will feel in control if you put this money aside and you plan ahead. And when you feel in control, control is freedom, because money isn't about being rich. If you see online about how people want to become rich and famous, and then their life is going to be complete and they're going to be happy and they'll die happy. But you speak to all these millionaires and billionaires. There's so many of them who are constantly depressed, anxious, unfortunately committing suicide. There's so many issues drug-related issues as well with all these celebrities.

Speaker 1: 18:56

So having all this money and being rich isn't the end goal. It's about not panicking when life happens. That's the main thing. It gives you freedom, control. It gives you a sense of calmness when you know that you've got the money there. That's one of the best things about the money side of things and actually putting money aside, because it gives you time, which is the most important thing, and when you get older, that's the thing you want back, which you can never have back. So if you look after your money, you put it where you need to put it, you don't get unexpected bills and put you back six to 12 months in terms of your finance goals. That's how you're going to grow personally and financially and actually hit your goals that you've been wanting to hit forever.

Speaker 1: 19:44

Here's my challenge to you Grab your notebook notes app on your phone and write down five irregular expenses that in the past, have blindsided you. It might be last week, it might be yesterday or it might be six years ago. Then, from there, once you've written those down, pick just one of them only one and set up a fund for it. I might have popped down that two years ago my car service blindsided me when my car broke down and if I picked that one individually, I'd then set up an own car fund. So automate $10 or $20 a week to that new fund. So then I'd set up for my pay. Whenever my pay comes let's say it's fortnightly then I'd put 20 bucks a fortnight or $40 a fortnight, pending how much you want to do weekly Over time then you can slowly add the others to it. So you might have, let's say you've got six different blindsides your car, your insurance, your dentist, you might have Christmas, your mom's birthday and we'll finish off with your health insurance. So over time do add all the others, because that's how you go from reactive to proactive and that's how you go from stressed to confident.

Speaker 1: 21:10

And remember the stats, because the stats are the most important aspects and guiding point of where you kind of don't want to be. That's the average. You want to be above the average. I'll talk about them again quickly. One in three Australians cannot cover a $500 emergency. Half of Australians have less than $3,000 saved. We spend as a country over $1,200 a year each on unexpected bills. So do not let yourself be a part of those numbers. Be the exception. Prepare, plan and protect yourself, and remember that money is about freedom, not fear, and freedom comes from preparation. But until next time, stay disciplined, stay focused and keep building and achieving your goals. We hope you enjoyed the episode. As always, you know exactly what to do. Hit that follow button, subscribe whatever platform you listen to this podcast on. Also share it to friends, family, co-workers, whoever you think may benefit from it. But unfortunately it's the end and we'll see you next week.