Expect the unexpected: How to protect yourself from surprise expenses

Life is unpredictable. At some point, you may find yourself in a situation where you need to pay for an unexpected expense.

But to do that, you ideally want to already have that money saved in a place you can easily access it, like an emergency fund. According to the MNP Consumer Debt Index in January 2026, less than half of Canadians (47%) say they have enough emergency savings to cover six months of living expenses.¹

If you want to be ready for whatever life throws at you, you need to have a plan. Learn how you can prepare for the unexpected. 

An unexpected expense is an expense that comes as a total surprise. You didn't see it coming and couldn't predict that it was going to happen.

A surprise expense can pop up in all sorts of ways, but here are some examples:

• Medical bill: Although many medical expenses are covered in Canada, there are some procedures that you might have to pay for, like emergency dental procedures, transportation by ambulance or prescription drugs.
• Home repairs: Inflation hasn't only affected your grocery bill. Repairs and renovations can cost more, too. According to a Statistics Canada survey, the price of maintenance and repairs has grown over the years, increasing by nearly a fifth (+19.2%) for homeowners from September 2018 to September 2024.²
• Car repairs: You don't always know when your car is going to need a new part or fix, and — here's another surprise — the average cost of a visit to a dealership service department rose to $539 in 2025 (up 16% from the year earlier). ³
• Pet care: One emergency surgery on your pet can cost $10,000 or more.⁴
• Tickets and fines: No one plans to get a speeding ticket or a parking fine. But if you do, you’ll want to pay it off promptly.
• Job loss or unemployment: Sudden job loss means you’ll have to find a way to meet your financial obligations — fast.

An irregular expense is a cost that you can foresee but doesn't happen every month. They're irregular because you don't pay them regularly, but when these bills come, they aren't a total surprise.

Irregular expenses to keep in mind:

• Property taxes: Unless you pay property taxes monthly, you’re going to be hit with a larger bill annually or biannually.
• Insurance: If you pay your house or car insurance annually, it’s an irregular expense.
• Vet bills: You’ll need to budget for your pet’s annual checkups and the medications and immunizations that take place through the year.

Creating a monthly budget will prepare you for unexpected and irregular expenses and strengthen your personal finances as you work toward your goals. Rather than trying to pull together money at the last minute, budgeting is proactive, so you're better able to adapt when expenses come up.

To make a budget, make a list of all your income sources, such as from your job, side gigs, rental properties or child support. Next, record everything you spend money on. Think about categories like:

• Regular expenses (mortgage, rent, utility bills)
• Unexpected expenses (home repairs)
• Irregular expenses (replacement laptop, attending friend’s wedding)

Now, subtract your expenses from your income. A positive number means you bring in more money than you spend. A negative number means you're spending more than you make and need to make some cuts.

As you look for expenses to cut, focus on your discretionary spending. These are non-essential expenses, such as food delivery or movie tickets. If an expense is a “want to have” not a “need to have,” it’s probably non-essential. Essential expenses like rent, groceries and transportation are the most important parts of your monthly budget.

That said, your budget should have some flexibility. If there’s no wiggle room for the occasional splurge, it will be extremely hard to follow in the long term.

Tip: You can make personalized budgets by using Scotia Smart Money by Advice+.⁵ This tool, which lives in your Scotia mobile app under the Advice+ tab, lets you set up how much you want to spend each month on different categories, like groceries and entertainment. With your budgets, you will find out if you are underspent or overspent in each category. If you are underspent anywhere, that could be a great opportunity to start saving that money in places like an emergency fund. 

You can build up emergency savings by adding it as an essential item in your budget. The amount you put away can vary according to what you can manage, but it’s important to make regular deposits so they can build up over time.

Goal-setting is also important. Experts recommend that an emergency fund cover three to six months' worth of living expenses. This seems like a lot, but some emergencies — like a car accident — might also prevent you from working for a time.

To calculate how much you should aim to have in your emergency fund, add up your monthly living expenses, including rent or mortgage payments, utilities, insurance and food. Then, multiply that number by three.

Once you’ve settled on your goal number, it’s time to calculate how much you can put in a savings account each month. Even small amounts add up, and more importantly, regular deposits will get you in the habit of saving. Consider amplifying your savings by putting your money into a high interest savings account like the Scotia High Interest Savings Account.

When you've saved three months of expenses, pat yourself on the back and aim for six. Once you have a fully funded emergency savings account, you can consider what you want to save for next, liking saving for a home or something more long term like retirement.

Tip: You can set up pre-authorized savings contributions through your bank so the money gets moved automatically. Scotia’s smart saving tools  — Pay Yourself First and Savings Finder — can also help you make savings a regular part of your routine. These tools can help you reach your goals by automatically moving small amounts of money into your savings account (you will need to have both an eligible Scotiabank chequing account and the Money Master Savings Account). 

When an unexpected expense arises, ideally, your emergency fund will cover it. But what should you do if your emergency fund isn’t enough? Or you've had a run of bad luck and are in the process of rebuilding emergency savings?

Here are some strategies to minimize the impact of a surprise expense on your bottom line.

Making more money is easier said than done, but you might consider taking on an extra job or side gig temporarily to pay down unexpected debt. Also, think creatively about what you might already have that's worth money. Maybe you have an empty parking space or an extra room to rent out or stuff you can sell online.

Another way to meet unexpected financial responsibilities is to consider a personal loan or line of credit. In general, personal loans are better for one-time expenses, while a line of credit will give you flexibility for a project or ongoing expense.

Some credit cards have an installment plan feature that gives you the option to split payments (typically 3, 6 or even 12 months). Not only can this help decrease the immediate financial burden of an unexpected expense may have on you, but these plans also often come with more favourable rates and other terms than if you simply paid for the expense on your credit card as a regular purchase.

A Scotia SelectPay^TM plan on Scotiabank credit cards, allows you to convert eligible credit card purchases of at least $100 in Canadian dollars, including taxes, into fixed monthly installment payments. Before choosing the plan, you can review the applicable interest rate, monthly payment amount and repayment terms to help decide whether it fits your budget.⁶

Using an installment plan on your credit card can help if you decide you want to spread out the cost of a larger purchase. When you pay in installments under the plan, a one-time surprise expense can become a smaller, more predictable payment that may be easier to manage as part of your monthly budget.

Paying in installments will only help you if you manage it effectively. Here are some tips:

• Stick to your budget: While an installment plan may be a great way to prepare for large expenses and manage your cash flow, having too many plans at once could cut into your necessary expenses and undo your careful budgeting.
• Track your monthly payments: Keep an eye on your plans to ensure you’re on track and within your budget.
• Make your payments on time: Stay on top of your payment due dates and make your payments on time. If you miss a monthly payment, your outstanding balance may start to accrue interest at the purchase rate that applies to your credit card.  
• Review the terms of your installment plan carefully before choosing it. 

Building a budget and an emergency fund are strong first steps toward being prepared for surprise expenses. Continue to build up your financial health by taking a proactive approach to your money.

Your budget should be a living document, meaning that you update it regularly to reflect your actual spending. Adjust anywhere there are discrepancies between your estimates and reality so you always know what you're working with. Regular check-ins will help keep you on track to meet your goals, so aim for a monthly review — as well as any time your income or expenses change.

Think about how you can think ahead to help yourself in the future. Be proactive in maintaining your car to avoid larger mechanic’s bills. Consider buying health coverage (for both you and your pet) if you don’t already have it. You’ll pay one set monthly fee rather than having to come up with the funds unexpectedly. And keep an eye on your speed on the roads! The time you save isn’t worth the potential ticket.

You might not be able to predict every unexpected expense that comes along, but you can prepare now for when it does. Build a smart budget and a solid emergency fund to protect yourself and take advantage of financial products and tools. With some planning and preparation, you can turn life’s surprises into manageable moments — instead of major setbacks.

Get started on your financial plan by booking an appointment with a Scotia advisor near you.