GanzChroma 0218
Save $1000
Open a Separate Bank Account
Start by opening a separate bank account and putting $1000 into it. Rename that account to "Emergency Fund" or "E Fund."
Purpose of the Fund
This money is for life's little murphies - the unexpected expenses that your budget didn't account for.
Avoid Budget Failures
Many people give up on budgeting because unexpected expenses derail their plans. They conclude that budgeting doesn't work for them. This emergency fund is your safety net to prevent that.
Step 1 - Save $1000
Even before you can budget, you need to save up $1000. Even if it takes you a year, make it a priority. Transfer a portion of your paycheck into this account as soon as you get paid, or set up an automatic withdrawal.
Statistics to Consider
A 2022 survey by the Chartered Professional Accountants of Canada reports that only 54% of Canadians have emergency savings. Alarmingly, 26% couldn’t come up with $500 in an emergency without selling something or borrowing money.
Savings, Not Investment
This money is not an investment. Keep it in a simple savings account, not in any investment accounts like TFSA. Also, avoid withdrawing directly from your savings account. Always transfer the money to your chequing account first to avoid fees.
Use and Maintain
Use this money for unexpected expenses instead of your credit card. And always maintain this $1000. If you withdraw $300, your goal next month or months is to top it back up.