Overlooking safety-net expenses could cost you in the long run

You may be ignoring an important part of your budget.

According to personal finance expert and author Tarra Jackson, it could wind up costing you more money in the long run.

“It’s those safety-net expenses that people just ignore or just really don’t realize the significance of until … they really need it,” said Jackson, author of “4 Financial Languages” and “Financial Fornication.”

Safety net expenses include things like secondary insurance (think pets, flood, cell phone and rental), as well as retirement funds, vehicle repair contracts and home warranties.

Jackson believes paying for these things up front every month could save you from a financial meltdown later when, for example, your car breaks down.

“Safety-net expenses allow me to fit those things into my spending plan so that it doesn’t take away from what I want to do,” she said.

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Certified financial planner Ivory Johnson, founder of Delancey Wealth Management, agrees that there should be a contingency for these types of things, although some of it may simply come from an emergency fund rather than insurance or a warranty.

However, 28% of Americans have no emergency savings, according to a July survey from personal financial website Bankrate.

“A lot of times you have times you have to make an assessment,” said Johnson, a member of the CNBC Digital Financial Advisor Council.

“You should save some money so you don’t have to have the warranties,” he added. “Have insurance on the things that are big, that would be catastrophic to you if it broke.”

If you aren’t prepared, you’ll need to take a hard look at your budget.

“You either have to increase your income and reduce your expenses,” said Jackson.

She suggests cutting back in other areas of your budget. She breaks her spending down into four tiers: Non-negotiable expenses, such as mortgage or rent and car payment; necessities by default, such as phone bills and primary insurance; the aforementioned safety-net expenses; and enrichment expenses, like travel and entertainment.

Of course, there are those who can’t squeeze out an extra dime after spending money on the basic necessities. However, many others aren’t saving because of choices they are making, said Johnson.

“If it is not food, clothing or shelter and you don’t have an emergency fund, it’s because you choose to spend it on something else,” he said.

For Jackson’s part, she recently realized she could cancel her Amazon Prime membership, since she didn’t use it much. Or, perhaps you are paying for a gym membership you aren’t using.

“Sometimes we just need to look at our bank accounts and we’ll find money,” Jackson said.

CHECK OUT: 53% of people saving for retirement are making the same mistake via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.