How to Save & Pepare an Emergency Fund in Canada
How to Save & Pepare an Emergency Fund in Canada
Posted on July 8, 2022
“To expect the unexpected shows a thoroughly modern intellect.” – Oscar Wilde. We would qualify that by saying to expect the financially unexpected shows a thoroughly modern intellect, which is what we’re discussing today. Our Puslinch auto loans team offers a few actionable tips to help everyone financially prepare for emergencies that life throws at us.
Expect the unexpected
The unexpected is exactly that, but we can still prepare for it. Being prepared means not having to panic, not having to depend on credit cards or get into debt while handling a situation.
If you’re trying to improve your credit score, save up for a down payment or are planning a Puslinch auto loan, preparation can help with all those things.
Here’s how to do it.
Set up a household budget
First you need to figure out where you are. That means setting up a household budget to show you in black and white how much you can save each month.
No need to get technical. Use a spreadsheet like Google Docs, have one column for income, another for outgoings and another for debts. Include everything in the budget to make it as accurate as possible.
Once complete, you should have an idea of how much you have left over each month and how much you could comfortably save.
Use that amount going forward.
Set up an emergency fund
Take the amount you can save and set up an automatic payment each month for that amount to go out on the same day as your bills.
That way, you’re saving before you get the chance to spend.
Keep saving as much as possible until you have $5,000 or so. This should be enough to cover most eventualities.
It doesn’t have to be $5k, that’s an example amount. As long as it’s enough to financially prepare for emergencies you’re likely to face, it should be fine.
Set up long term savings
When you have an emergency fund, move some of that into long term savings. Keep the automatic payment going and move some into long term savings when you hit your $5k or whatever limit you set.
Long term savings could be high interest savings accounts or other investments that typically pay more interest but aren’t instant access. The exact type of investment is up to you but ideally, you would want to still be able to access it if you need to.
Consider insurances
If you don’t get life insurance with work, perhaps consider buying it yourself. It’s another step you can take to prepare for the unexpected.
While we hope you never need it, having life insurance is a useful safety net for you and your family. We would strongly recommend it if you have a dangerous hobby or job!
It isn’t possible to prepare for every conceivable eventuality but it is possible to prepare for the worst. Having even modest savings can make all the difference should the worst happen. Not having to get into debt to pay for emergencies could genuinely be the difference between making it through and getting into trouble.
We will use all our skill and experience to deliver the lowest possible Puslinch auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.
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