How to plan for financial emergencies.
Updated: Oct 9
Original article by:
Kat Eschner
TVO Today
January 25, 2024
📰 Read the FULL ARTICLE here.
I spoke with TVO Today about how to prepare for a financial emergency, no matter your situation. Here are the highlights and my contributions.
Key Takeaways
Start by listing the emergencies you could realistically face, from a car repair to a sick pet or a roommate moving out, so you know what you're planning for.
Insurance can reduce some risks, and knowing your deductibles helps you decide how much cash to keep on hand.
Line up backup options ahead of time, such as family support, a line of credit or a low-interest credit card, and treat payday loans as a last resort.
The usual goal is three to six months of expenses, kept in an easy-to-access high-interest savings account rather than invested.
Consistency matters more than amount. Even small regular contributions build a cushion over time.
My Perspective
When people hear they need three to six months of income saved, it can feel impossible. I encourage clients to work out the bare-minimum cost of their life instead, which usually makes the goal far more manageable.
"I encourage people to figure out what is the minimum price tag to your life."
An emergency will happen sooner or later, so an emergency fund isn't a nice-to-have. Treat it as an essential: set up an automatic transfer that lines up with your paycheque, so saving becomes an extra deduction you don't have to think about.
"If you treat your future like a mandatory bill that needs to be paid, you can approach it a little bit differently."
Originally published in TVO Today by Kat Eschner on January 25, 2024. Use the link at the top of this post to read the full article.
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