Uh-oh. Sometimes things happen unexpectedly. Things like losing a job, an expensive veterinary bill, or a broken-down vehicle can result in unplanned expenses. Here are some tips from the Financial Consumer Agency of Canada (FCAC) on how to plan for the unexpected by gradually setting up an emergency fund.
1. Open an account that you can access easily: ensure you can make withdrawals without penalty and see if you can earn interest on the money you save. Use an Account Comparison Tool to find the right account for you.
2. Be realistic with your savings plan: don’t worry about starting small. Determine what you can put aside every week or month and try to start right away. FCAC recommends trying to reach the goal of 3-6 months of your regular expenses (which might seem like a lot of money). Remember that the process is gradual. Start now and build on your savings.
3. Make it a habit: consider automatic withdrawals from one account to the other. If automatic withdrawals are not for you, try setting a savings reminder on your cell phone or computer. Try to tuck away small change into a container. You’ll be surprised how quickly it adds up!
4. Eliminate a monthly expense and add it to your fund: simple things like bringing your lunch to work can add up over a month. Consider things you can live without or change to add more to money your fund regularly. For example: I recently cancelled my Netflix so I could split my friend’s account instead. Here are some other ways you can do this:
- Eliminate one non-essential food choice from your grocery list
- Make your coffee at home and bring it to work
- Use discount coupons
I found this expenses calculator super helpful. It shows me how much small daily expenses accumulate over time. I found out that if I stop buying coffee from coffee shops, I’ll save over $1000 a year.
5. Look for opportunities to increase your fund: review your goals on a regular basis and keep adjusting your contributions based on your circumstances. Try to tuck away any extra money your receive into your fund. For example: a tax refund, a raise at work, money from a garage sale, or money received as a gift.
Think we missed something? Tell us below! We want to hear your favourite tips for adding to your emergency fund.
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About Consumer Protection BC
We are responsible for regulating specific industries and certain consumer transactions in British Columbia. If your concern is captured under the laws we enforce, we will use the tools at our disposal to assist you. If we can’t help you directly, we will be happy to provide you with as much information as possible. Depending on your concern, another organization may be the ones to speak to; other times, court or legal assistance may be the best option. Explore our website at www.consumerprotectionbc.ca.