Encountering a surprise expense is never pleasant. Nevertheless, it's important to have plans in place for covering them when they do arise. With a bit of preparation, you can navigate the problem of an unexpected bill effectively and inflict minimal damage on your finances. Here are four smart ways to cover surprise expenses when they come up.

Dip Into Your Emergency Fund

The best way to handle a surprise expense is to pay it using part of your emergency fund. Because this is money you have saved back, there will be no interest or penalties associated with using it. Some expenses are too large for this method, and not everyone has an emergency savings in place. If you can, though, you should use your emergency fund before turning to any other method.

Take out a Personal Loan

If the expense is too large for your emergency fund to cover, you may want to consider taking out a personal loan. This approach will let you get your bill paid off quickly, then repay the lender over a longer period of time. You should pay the loan down as quickly as possible to keep interest to a minimum, but personal loans can be extremely helpful when emergencies arise.

Make a Withdrawal From Your 401(k)

Under some circumstances, it may be sensible to withdraw some money from your 401(k) plan to cover a surprise bill. Taking money out of a retirement account usually isn't a great idea, but it may be necessary if you find yourself unable to cover a surprise expense. Because your 401(k) is the main vehicle for your retirement savings, though, it's best to leave it alone, if possible. This is especially true if you're younger, since the money in your 401(k) now has more time to grow and compound before you retire.

Take out a Home Equity Loan

In some cases, an unexpected expense will be too large for your savings, a standard personal loan or a 401(k) withdrawal to cover. If you end up in this situation, you can turn to a home equity loan to get your finances back on track. Home equity loans allow you to borrow against the value of your home. As a result, the line of credit from such a loan can be several tens of thousands of dollars.

While no one likes unexpected expenses, they're a part of life. Using these four simple approaches, you can come through them relatively easily and become financially stable again.

Author's Bio: 

Lizzie Weakley is a freelance writer from Columbus, Ohio. In her free time, she enjoys the outdoors and walks in the park with her husky, Snowball.