As much as we hope that emergencies won’t happen, we all know that they do. A family member can develop a health issue, you might need to make an emergency trip, you may have a car accident or breakdown, severe weather could flood your basement or crack your pipes, or you may have to fly to a loved one’s funeral. Any of these emergencies can be expensive, and we all know that we will likely encounter some sort of emergency from time to time. So why not be prepared rather than potentially become another victim of an emergency.
In good times, everyone thinks that their job is secure, but in bad times, many begin to realize that bad things can happen to anyone. You could suddenly lose your job, your business could dry up, you might get injured—either physically or psychologically or become too sick to work. Any of these things can happen to you. Employment Insurance (EI) doesn’t kick in until you have been unemployed for 6 weeks. Do you have enough savings to tie you over or will you be living on credit? Living on credit during a time like this can quickly make a bad situation worse. Minimum payments become higher and higher until they are unaffordable and credit limits no longer budge. Then when you finally do get some income, what used to be enough doesn’t get you by because you have all these new debt payments to make each month. So now you actually need more income than before because you’ll need to pay down these debts and eventually work to get them paid off.
There are huge emotional, psychological and physical consequences to always living stressfully, from hand to mouth, pay cheque to pay cheque. People who don’t plan for their future seem to run from “crisis” to “crisis.”
There is a little known truth that happiness can come from being organized. Being organized isn’t going to make you happy all by itself, but it can sure help. There’s so much in your future that you don’t have control over, so putting aside some money to spend when you need it is actually organizing and taking control of your future and financial affairs. You have nothing to lose by saving – and only a happier future to gain.
Start today by setting aside a little money each pay cheque until you have an emergency savings fund of $500 to $1,000. If you receive a bonus from work or an income tax refund, use that to get you started or to add to what you’ve already got set aside. As life happens and you need to dip into your fund, build it back up. It takes a bit of work, but it’s a habit worth getting in to.
You may need to create a spending plan to keep you on track. Here’s a free tool that has already helped a lot of people. Give it a try!