Simple ways to increase your contributions to your emergency fund. 

An emergency fund is an integral part of your personal finances. Its purpose is to provide you with a strong financial cushion in case of an emergency, rather than borrowing from credit. An emergency could be anything from unplanned car repairs, home repairs, loss of income, etc. It is stressed by many financial professionals that including savings for your emergency fund within your budget should be top priority, but when budgets are tight that can feel almost impossible. Below are some creative ways to contribute to your emergency fund. 

1. Automate savings – By setting up an automatic transfer from your chequing account to your savings account each pay day, you’ll be consistently contributing to the emergency fund without having to think about it. 

2. Track your expenses – By tracking your daily expenses, you can identify the areas where you could cut back. This awareness can help you make conscious choices about your spending habits, cut back on unnecessary spending, and redirect the money you are now saving into your emergency fund. 

3. Challenge yourself – Create a saving challenge for yourself, or you and your family to build up your emergency fund. This might be something as simple as setting aside a certain percentage of your income each month, or as challenging as setting aside different dollar amounts daily or weekly or even no spend challenges.  With a simple google search there are many different challenge ideas available and it’s easy to find one to fit your goals. 

4. Cut back on subscriptions – With so many options available for monthly subscriptions, many of us have subscribed to numerous ones at once, such as having Netflix, Disney, and Prime all at once. By evaluating the amount of subscriptions, you have, and the ones you are more likely to use on a regular basis, you are able to cancel the ones that are least used and re-direct the money saved towards your emergency fund. 

5. Sell unwanted items – Many of us have closets or storage rooms full of items we no longer use, such as old clothing, kid toys, old furniture, old electronics. By going through the items and selling what you no longer need or use, you can turn your unwanted belongings into cash and put the proceeds into your emergency savings fund. 

6. Use the 24-hour rule – Before making any non-essential purchases, implement the 24-hour rule. Wait a full 24 hours while considering if the item is actually necessary, or just an impulsive purchase. This can help you stay within your budget and not have to take from other budgeted areas to pay for the purchase. 

The amount each individual or family needs to have set aside for an emergency fund can differ depending on each situation:
- Single-earner household – 6 months worth of basic living expenses
- Double-earner household – 3 months worth of basic living expenses
- Single-earner household with secondary source of sizeable income – 3 months worth of basic living expenses

By utilizing one or multiple of the above methods to build your emergency fund, or to top it up, you can consistently make progress to reach your goals.

If you are struggling to make ends meet after covering basic living expenses and debt payments whereby you have nothing extra for emergencies, it would be a great idea to explore your options.
If you are looking for advice, or a second opinion about your debt, it does not cost anything to talk about your options. Every financial situation is unique and viable options can differ from person to person. A conversation free of judgment and cost, is the first step to determine options for debt that make sense for you. For a free consultation, please call or text (506) 645-1814 or email jaime@tackledebt.ca; or visit www.tackledebt.ca.