How long do you think it would take you to find a job, price if you lost your current one, store and how would you sustain yourself financially? What would you do if you found yourself in an emergency that needed cash ASAP? What if you were presented with a financial opportunity and needed money right away?
Most people would either borrow money and incur high interest or draw from their RRSP, incurring a hefty tax bite. However, if you have an emergency fund set up, you don’t have to worry about it!
- What is an emergency fund? It’s an investment that is set aside in case of emergencies. like: Job loss, minor or major repairs, financial opportunities and etc.
- It’s important to try and set aside at least 3 months of your minimum living expenses.
- The money should be invested somewhere safe, guaranteed and accessible within 1-2 business days.
- You can start small, but it eventually it adds up. You can invest a small amount regularly, even if it’s only $5/month. Getting into the habit is what matters.
- Invest it somewhere it’s not visible to you. For example, not in your bank account because you are more likely to spend it.
- Reduce an expense: Find one expense in your monthly budget you can reduce in order to begin building an emergency fund.
If you would like to discuss opening an emergency fund or any other investment or insurance topic, please feel free to contact me anytime!