- SH*T HAPPENS – If you vehicle broke down tomorrow do you have the cash to repair it or would it have to go on credit? What would happen if you tripped off a curb and broke your leg and were unable to work for a couple months? How would you pay your bills? If the unthinkable happened and you were fired, laid off or your business shut down how long can you survive financially? What if you don’t find an equal paying job right away?
- HEALTH PROBLEMS – You were smart and bought all that extra insurance to cover you in case of critical illness or health issues. Uh-Oh…fine print the money won’t kick in for 90 days…what will you do in the meantime? What if the insurance doesn’t cover you or you don’t have any insurance? Nobody wants to think they will get sick or ever need surgery but if it does, do you want to be laying in a hospital bed worrying about how your payments will be made?
- INTEREST RATE JUMP – Your mortgage is up for renewal. You’ve been quite comfortable in your nice low rate with low payments. A $250,000 mortgage at 2.39% is $1106/month for a payment. If the rate jumps to 5.14% your payment would jump to $1454/month, do you have the extra $300? Look back at historical interest rates; if you had to pay 10-20% on your mortgage could you? A jump to 10% would put the monthly payment at $2236!
Now that I’ve scared the poop out of you, here’s the good news! An emergency fund is not that hard to set up and can save you unwanted stress and anxiety in the future.
How Much Do You Need in an Emergency Fund?
Well it depends on your expenses. Someone that only has $2000/month in expenses will need considerably less than someone that spends $4000/month. I like to recommend 3-6 months of expenses in a Savings Account at any given time. For Canadians I recommend using a Tax Free Savings Account so your money is earning you a bit of interest but no penalties for withdrawals. There are many other options so you have to decide what is best for you.
NEED HELP FIGURING IT ALL OUT?
Money Miracles coaching can help you figure out where your money goes each month. Together we help you design a monthly spending/saving plan that fits with your lifestyle. I offer a variety of packages from a simple basic budget to a 12 week coaching program.
Contact me today for a free consultation.