The 4 Most Common Unexpected Expenses Millennials Face — And How To Plan for Them
Written by
Cindy Lamothe
Edited by
Amber Barkley
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If you’re a millennial, you are likely well aware how unexpected expenses can creep up and derail your monthly budget. Mafe Aclado, finance expert and general manager of Coupon Snake, said it’s more than easy for these to sneak up on you.
From medical bills, to that unexpected damage in your car or home appliances that need to be quickly repaired, to mold and termite infestations that put both the structure and value of your home at risk — she said all of these can quickly erode your savings.
“The truth is that dealing with surprise costs is one of the financial situations that forces both savers and spenders to realize the importance of having a safety net,” she said.
Below, experts break down the most common unexpected expenses millennials face — and how they can handle them.
Medical Emergencies and Health Insurance Gaps
According to Dennis Shirshikov, head of growth at GoSummer and professor of finance at City University of New York, even with insurance, millennials are often hit with out-of-pocket expenses that they aren’t prepared for. “High deductibles, surprise medical bills or gaps in coverage can add up quickly.”
He said one solution is to build a dedicated health savings account (HSA) if your insurance plan allows it.
“This offers a triple tax advantage — contributions are pre-tax, the account grows tax-free and withdrawals for medical expenses are also tax-free,” he explained. “Much like hedging against market downturns in real estate, this creates a buffer for unforeseen healthcare costs.”
Car Repairs
For many millennials, particularly those relying on used vehicles, Shirshikov said surprise car repairs can derail a budget.
“One strategy I’ve seen work well is creating a sinking fund — a pool of savings earmarked for specific future expenses, like car maintenance,” he said. Instead of getting blindsided by a $1,500 repair bill, you proactively save a small amount each month.
“This is akin to setting aside money in real estate for unexpected property maintenance costs, smoothing out the financial shock,” he added.
Housing-Related Costs
Whether it’s unexpected rent hikes, emergency home repairs or moving costs, experts say housing is one of the biggest categories for surprise expenses.
“Having a financial cushion here is crucial,” said Shirshikov.
He said millennials can benefit from automating their savings, directing a small percentage of each paycheck into a high-yield savings account dedicated to housing expenses.
“Just as a well-maintained rental property reduces future costs, proactively saving for housing helps handle these surprises without tapping into your primary savings,” he said.
Technology Replacements
With our increasing dependence on technology, the need to replace a broken smartphone or laptop often comes unexpectedly and at a high cost. One way to prepare, according to Shirshikov, is by leveraging warranties or insurance plans that offer coverage for accidental damage or breakdowns.
Additionally, he said budgeting for tech upgrades annually instead of reacting to emergencies can help millennials avoid credit card debt when the inevitable happens.
Additional Advice for Handling Unexpected Expenses
“As a millennial, even when you have enough in your savings and emergency fund to cover the costs of one unexpected cost, it is important to consider replenishing your savings,” Aclado said, “so as to ensure that you stay prepared for the next emergency when it arrives.”
However, she noted that since rebuilding your savings and emergency fund after a major withdrawal could take time, it would be wise to consider making cutbacks in your expenses. “This way, you are able to rebuild your savings faster and reduce the chances of needing a loan to fund your next unexpected cost.”
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