Almost half of Canadians don’t have money set aside for emergency expenses, a new poll reveals [via the Globe and Mail]. On average, 45% of Canadians are failing to set aside money for unforeseen circumstances, like the loss of a job, or other potential emergency situations. Experts suggest having enough money saved to cover at least 6 months of expenses, but that can be extremely difficult when most of your income is dedicated to covering the basic costs of living. However, especially in today’s challenging economy, it’s best to be prepared. Here are 5 ways you can start building your emergency fund today:
Save your change. Ditch the plastic and start using cash to pay for your purchases. Not only will that help you to actually see how much money you’re spending each month, but saving the change will allow you to quickly accumulate some extra cash.
Pay yourself first. Set up an automatic withdrawal from your chequing account to your savings account so that a certain amount of money is taken out each time you get paid. Since that money is getting transferred out of your account automatically, you’ll forget about it – and be surprised at how quickly it can add up. Even if it’s just $20 a month, this is one of the best ways to start saving.
Open a high interest savings account. Many banks offer a high interest savings account that allows you to earn more interest on your money than a traditional savings account. However, those accounts also tend to have fees for withdrawing money. Since emergencies don’t occur often, a high interest savings account could help you to ensure that you’re only spending when it’s absolutely necessary.
Clean house. There are probably items in your house right now that you don’t use that could make you money. While they may not get you on the Antiques Roadshow, selling off unwanted furniture or household items on eBay, Craigslist or Kijiji can be a quick way to jump-start your emergency fund.
Set a budget (and stick to it!). This probably seems obvious, however it can be incredibly difficult – especially when money is tight. Still, it’s important to look at where your money is going and determine if there are any areas that you can begin to cut back. If you’re buying a coffee every morning, or going out for lunch once a week – that cash could be put to use to help you in case of emergency.
Setting aside some money for emergencies is extremely important, as it’s impossible to predict if or when you could lose your job or experience a life-changing event. By making small changes to your spending habits today, you can ensure that you’re better prepared for tomorrow.
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