8 Easy Steps To Get Started With An Emergency Fund

An emergency fund is more valuable than ever in today’s shaky economy than ever. You never know when life is going to throw you a surprise. From your water heater dying to your car stalling, you don't have to get payday loans in Barrie or wherever you live, just for basic survival needs.

An emergency fund gives you a financial safety net and peace of mind to handle the situation thoughtfully.

This article serves as a survival guide. Maintaining and managing a proper budget is the first step to living with less stress, and having an emergency fund is an integral part of that plan.

Why Canadians Should Have An Emergency Fund

When adverse life circumstances happen, those without an emergency fund have no way to cope.

The CBC shows that Canadians in British Columbia and the surrounding areas have less than a month’s worth of savings to handle an unexpected life event. As we saw in the Covid-19 panic of 2020, many people are at risk of going broke in just one month of unemployment. Within British Columbia, 45% of Canadians don't have an emergency fund. Ontario and Alberta residents appear to be the least prepared for a financial emergency.

6 Reasons To Maintain and Manage An Emergency Fund

We’ve listed six reasons why an emergency fund might be a lifesaver below:

What if your car breaks down?

Unless you have some other plans, you’ll be stressed out without a car. How will you get to work, pick the kids up from school, or run errands? Walk-in visits to the mechanic can be costly, and if you don’t have the cash at hand, you may end up without wheels for weeks or even months. In a society highly dependent on cars, having some funds set aside for a transportation emergency is a must.

What if you were suddenly laid off?

No one wants to be laid off. However, in most workplaces, you could get laid off at a moment’s notice. Without a cash reserve to keep you afloat, how would you make ends meet? How would you take care of a family? If you don’t have a cash reservoir set aside, you’ll be in a rush to find a new job. You may end up accepting a job you hate just so you can afford groceries. An emergency fund will allow you to find a new job at your own pace.

What if there was a serious illness within your immediate family?

While we all hope to live long and healthy, you never know when sickness will strike. If you end up falling sick or taking an extended medical leave, you may lose your job. On top of that, medical bills can rack up quickly. Without any fallback plan or savings, an illness can spell ruin for even the most successful people.

What if you were faced with a divorce?

Some couples rely on each other to stay financially afloat. Can you manage everything on your own? Divorce is at an all-time high, and it always pays to protect yourself.

Whether you're financially preparing for a divorce, job resignation, recession, or perhaps even your wedding, having an emergency fund can save you from disaster during a difficult time.

What if you face major home repairs or improvements?

If you're a homeowner, you understand how expensive it is to address home emergencies. However, if you don't have enough home equity built up, the responsibility can fall on your shoulders.

Whether it’s your AC going out during a hot summer or your roof needing a repair during a rainy spring, you will need to call someone in. Unfortunately, some of these fixes can't wait till the end of the month. So when storms, fallen trees, or broken pipes strike, it will pay to have a small bundle of cash set aside.

What if you need to take a trip?

There are times you may be stressed and need to take a weekend vacation. Taking leisure trips can improve your overall well-being. While you may opt to take a holiday loan, nothing beats having an emergency fund of your own.

Final Thoughts

With a global pandemic disrupting the economy and numerous jobs in Canada, creating a financial plan now can save you stress and heartache later. Whether it’s setting aside a hundred dollars from every paycheck or forgoing morning lattes, creating an emergency fund is a choice you won’t regret.

Remember that as hard and boring as saving money can be, it can save you in the long run. Have fun with savings. Drop that dollar you decided on per day in a jar and dance about it.