03/11/2021
Break in an emergency!
An emergency or “rainy day” fund is undoubtedly, an important piece of your financial toolkit. The pandemic is proof enough. More than ever, one needs a safety net to fall back on in times of hardship. People appreciate having an emergency fund only when they need it the most.
As the Covid-19 crisis continues to impact people’s livelihoods, it’s more important than ever to set aside whatever you can for income loss, medical bills, essential expenses and business expenses.
How much should you save? A good rule of thumb is to keep around three to six months’ worth of living expenses. However, if your income fluctuates you may need more — like six months to a years’ worth of expenses.
Strategies to grow your emergency fund:
🔑 Automate Contributions.
Treat this like a bill you have to pay and make regular contributions to, for example, your Tax Free Savings Account.
🔑 Use your tax refund or cash windfall.
Save your tax refund, or any cash windfall such as a bonus or an inheritance. Save at least a portion of it.
🔑 Trim your budget.
Take a close look at your monthly expenses and see what you can trim. Can you cut back on take out, unwanted subscriptions and membership fees of services you seldom use, as well as, other discretionary spending? Also, you can make changes to what’s probably your biggest monthly expense: namely housing, by refinancing your mortgage, or finding less expensive housing options.
Don’t feel overwhelmed. Start small. Make saving a habit.
