Why you need an emergency fund

 
Reduce your financial stress by setting aside money to deal with the unexpected

 
November 5, 2020   3 min read

COVID-19 has thrown a huge curve ball into all of our lives. If you’ve been lucky enough to maintain your income during the pandemic, you may find you’ve been spending less. There’s never been a better time to reduce financial stress by stashing extra money into an emergency fund.

Why is an emergency stash a good idea?

Putting aside some money can help you manage tough times without having to rely on credit cards or a high interest loan. You don’t want an unexpected situation to put you deeper into debt.

How much should you save?

Most experts recommend you save between three and six months’ worth of living expenses (think rent or mortgage, food, utilities, and gas). Don’t be afraid to start small—even a few hundred dollars can help you with an unforeseen car repair.

6 tips to help you save

  1. Talk to your financial institution about the best account for your emergency fund—make sure it allows you easy access to your money.
  2. Break your savings plan into manageable steps by deciding how much you can afford to put away each month to reach your target amount. Your plan should include some short term emergency money and some longer term but still easily accessible investments.
  3. Remember that little changes can make a big impact. Doing a meal plan so you can shop once a week and reduce impulse buys is a great way to find extra money for your savings.
  4. Set up an automatic payroll transfer to your emergency savings account so you can save for the future before spending your pay cheque.
  5. Review your budget regularly so you can take advantage of changing circumstances (like paying off a debt!) to adjust your savings.
  6. Don’t raid your emergency fund for anything other than an emergency.

If you have any questions about your savings strategy or ability to pay down debt, don’t hesitate to contact one of our caring experts for advice and easy tools. We’re here to help.

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