There has been a lot of discussions lately about being prepared if the coronavirus hits your community or your household. Experts have recommended that you stock up on medication and groceries in case you have to stay put for 72 hours-14 days. But have you considered the financial impact that might happen if you were off from work for a few days or a few weeks? The flu can affect not only your health but also your wallet.
Consider this: you are an hourly paid employee. You fall ill and can’t work for two weeks. That’s two weeks with no income flowing in and yet the rent, car payment, internet, power & phone bill still have to be paid. Perhaps you are too sick to venture out for groceries so you order delivery more than usual. You use your credit card which still needs at least the minimum payment paid by months end. What if the kids also fall ill and you need to stay home to take care of them. Your two week prediction now lasts more than a month without any pay. Now imagine you and your spouse, partner or significant other both get sick at the same time. That’s potentially two incomes not coming in. Without an emergency fund with enough in it to cover your reoccurring monthly expenses for 30 days or more, you’d be scrambling to get the expenses paid. This is the catalyst that starts the ‘robbing Peter to pay Paul’ syndrome that could create financial hardship if you have no nest egg.
If you do have an emergency fund, good for you. But you are the minority not the majority. In a recent poll, Canadians admitted they would have a difficult time surviving if they lost only one weeks pay. With the rising costs of everyday expenses and the high costs of carrying credit card debt, more Canadians are finding themselves struggling each month. As a licensed insolvency trustee with over 29 years experienced counselling on debt issues, trust me when I tell you, most Nova Scotians are over extended and stressed out over their finances.
No matter what your income, an emergency fund is essential to your well being. It gives you peace of mind. If a series of unfortunate events does happens, you can manage. Savings is not typically a quick process. Slow and steady best wins the race. Each pay its recommended to systematically allocate a certain amount to savings no matter how small. Overtime, it will build up. Breaking a $20 bill? Use the change to go towards savings. Expecting a tax refund? Flip it into savings instead of spending it. Got a commission cheque from work? Make a plan to live on your pay but save the commissions. Come up with a strategy that works for you.
The only difference between those that save and those that don’t is one thing: they made it a priority. It mattered more than spending it on wants. Practice living below your means, not at or beyond them.
When it comes to creating savings, consider the Nike slogan ‘just do it’ as a motivation. There is no better day to save than today. Don’t wait until your household is hit with a bump in the road before you protect you or your family from financial problems.
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