How Do You Prepare for the Unexpected?

On the movie Remember the Titans a football team is challenged with looking beyond racial and social expectations.  At one point Gary tells his friend Ray something to the effect of:

When something unexpected is thrown your way, you just got to take it and run with it.

There are so many unknowns in life.  When it comes to budgeting, planning for those unexpected things is both difficult and essential.  You may not have major car maintenance every month, but an unexpected problem could put serious strain on a tight budget.

How to Prepare
I definitely am far from knowing all the answers. Our life seems to be made up of unexpected twists and turns in expenses & income.  Sometimes I feel like it is impossible to plan for anything because there are so many unknowns.  But, in the end, having a plan- however broad it may be- allows us to stay on track when unexpected events are thrown our way.

Here are three things that we have done to prepare for the unexpected:

First- Create an Emergency Fund. To start off, try to save1-3 months of living expenses.  If you have an unexpected loss of income, this can stand as a buffer and ensure that your necessities are taken care of.

Second- Set aside savings for known expenses.  This may sound basic, but it is also easy to forget. 
 
For example: Daniel and I traveled to California for Thanksgiving.  Prior to our trip, we had set aside $300 to pay for our gas and travel expenses. Because we had the money set aside, we did not have to take that extra $300 out of our income for that month.  We also knew in advance that we would be able to afford the trip. 
 
Saving small amounts each month towards future expenses allows you to see what you realistically can and cannot afford.
 
Third-Save for possible big expenses.  On top of saving for expenses you know will come, be sure to save for possible unknowns. 
 
For example: Daniel and I have a small Auto Fund to pay for car maintenance- both expected and unexpected.  This may not cover all auto expense that will come our way, but it would serve as a good buffer in case of an unexpected expense.  We also have an account for medical expenses with the same idea in mind.  These are two areas that can easily bust a budget if not prepared for.  
 
By having an emergency fund, preparing for known and possible unknown expenses, we have been able to avoid financial stress and hardships.  Though our income is far from regular, we have been able to prepare.  At this stage of our life, that is as close to financial peace as we are going to get.