Gabrielle Olya

Fri, May 16, 2025, 10:00 AM5 min read

As the saying goes, it’s always best to “expect the unexpected.” This is especially true when it comes to finances. While you may not want to dwell on the possibility of needing an unexpected car repair, a trip to the emergency room or an expensive home renovation, it’s important to create a financial cushion that will allow you to pay for these costs in stride.

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Yet, many people don’t have such a cushion. According to a recent TD Bank report, a majority (72%) of Americans have been impacted by unexpected bills. However, 36% of Americans said they are not confident they have enough savings to cover unexpected bills. This can lead you to fall into three all-too-common money traps.

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According to the TD Bank report, 59% of Americans who have been impacted by an unexpected bill have gone into debt as a result. However, this can be avoided with the proper preparation.

“The first step to being financially prepared for an unexpected expense is to proactively build an emergency savings fund, which should consist of three to six months of living costs,” said John Bunzel, head of deposit growth and engagement at TD Bank.

“Additionally, creating a monthly budget and sticking to it will ensure you’re setting aside funds in your emergency savings, while identifying any financial habits that could prevent this,” he continued. “Having an emergency savings fund will help you avoid incurring unwanted debt or dipping into retirement savings, which can hinder your ability to reach short- and long-term financial goals.”

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Among Americans who have been impacted by an unexpected bill, 33% had to reallocate part of their savings to cover costs, the TD Bank report found. This is not necessarily a bad thing, however, as some bills warrant dipping into emergency savings.

“If your emergency savings is fully funded, it is appropriate to pull from it in a responsible way,” Bunzel said. “Many consumers use their emergency funds for larger expenses, such as a car repair or medical bills.”

However, your emergency savings should not be used for bills you can anticipate or control.

“If the bill is expected, you should allocate it into your budget every month to accommodate the costs where possible,” Bunzel said.