Thousands of mortgages come up for renewal every year in Canada. By March 2025, 31%…
How Much Do You Need for a Money Emergency
No matter how little cash you have, you need to plan for a money emergency.
And that plan should NOT include a cash advance. Or calling anyone who’s on your mobile phone speed dial.
Credit should only be an option if you plan to pay if off relatively soon. Like this month. The last thing you want is to add to your debt level.
What you need is emergency savings. Actual cash to navigate the unexpected.
Let’s discuss three key issues:
- How much you need for a money emergency;
- How best to build your emergency savings; and, finally,
- Where should you keep your savings
First things first. How much do you need?
Financial experts say you should have three to six months expenses in case you lose your job. That’s great if you have it like that.
Many people don’t. So, start with a smaller goal.
How much would you need for an unexpected car repair or dental expenses? You know…the things that life tends to throw at you on the regular.
Does a thousand dollars sound right? If so, set this as your short-term goal.
How Do You Build Emergency Savings
Next, how do you build your emergency savings?
Let’s work with our thousand dollar example.
Twenty dollars every week for a year. Minus two weeks vacation, of course. Because who saves money on vacation?
That’ll get you $1,000.
But, what if finding $20 a week in your tight budget is too much? Or you’re in a precarious job situation, maybe even out of work?
Look around your house and find things you don’t need. Gadgets, books, even clothes. You can have a garage sale or put your stuff on Kijiji or Craig’s List.
Or how about a side job? Whatever talent you have, there’s someone willing to pay you for it.
Dog walker, babysitter, math tutor, clothing parties, techno wiz, videographer, manicurist, AirBNB, closet organizer, even Uber driver. You can earn $1,000 in no time.
Where Do You Put Emergency Savings
Finally, now that you have your emergency savings, where do you put it?
If you trust yourself to keep your mitts off, put it in a savings account at your bank or credit union. Hook it up to auto-deduct and watch the funds accumulate. Or don’t.
Forget about the money. What money? It’ll be there when you need it.
If, however, the cash is too tempting, put it out of reach. You don’t have to bury it in the backyard, just someplace you can’t easily get to.
Maybe an account that has no ATM access. You know what lengths you might go to. Plan accordingly.
Once you have a money emergency fund, there’s no excuse for using plastic.
Congratulations! You’ve taken a step toward financial freedom.
But what happens if your debt payments exceed your income? And despite your best efforts, you still can’t build emergency savings?
It may be time to speak to a professional who can help you get your finances back on track. There is help available.
Call today to set up a free consultation with a Licensed Insolvency Trustee to discuss your options.
For more information call 519.310.JOHN (5646)