How to build an emergency fund

How to build an emergency fund

Table of Contents

In this article, we discuss how to build an emergency fund For people who are trying to dig their way out of debt. Setting aside $500 to $1,500 (depending on their situation) to cope with emergencies, enables people to focus on paying down their debt, and often removes the need to use credit when emergencies occur. It is a powerful tool that helps people stay on track and get out of debt.

Relying on credit as your only emergency fund is short-sighted, as you will not only have to cope with the emergency, but you will then have the added burden of debt and interest charges.

Basically, an emergency fund is your shield against having to use credit as a source of income.

What is an Emergency Fund?

Let’s start with what it is not – it is not a great sale on shoes, it is not a vacation, it is not the latest electronic toy, it is not a hot tip on a horse/stock, and it is not any purchase that can be reasonably put off.

An emergency fund should cover three to six months of your expenses. The more unstable your income, the more you should have in your emergency fund. An emergency is an essential and unexpected expense that you cannot put off – for example – fixing the car that takes you to work, repairing the leaking roof, and visiting the dentist with a toothache.

As your financial situation improves, and as you develop skills in budgeting, there are many things that you will be able to plan and save for – that will help to reduce the number of emergencies you have to face – ie:

  • Car Maintenance
  • Home Maintenance
  • Dental Check-Ups

What happens if I need to use the money?

If money from the emergency fund is used, it must be replaced asap.

If you are in the process of getting out of debt, you may have to rebuild your emergency fund by making minimum payments on your debts and putting the rest towards your fund.

If you are out of debt and have to use your emergency fund, then you will need to refund it as soon as possible by putting non-essential spending on hold.

How to avoid spending the money in your emergency fund

To help keep your emergency fund available in case of emergencies, but safe from unnecessary use, it may be wise to:

  • Keep your emergency fund in a separate bank account
  • Do not have debit card access to your emergency fund
  • Get the best interest you can without risk or tying up the fund for a period of time.

Some people like to keep a small portion of their emergency fund in cash, at home, and in a safe hiding place. There are good and bad points to this approach, and you must carefully consider what is best for you and your family.

Where do I find the extra money?

Properly funding your emergency fund requires consistency and follow-through. Depending on your situation, you may need to:

  • Sell some of that useless stuff that is laying around your home.
  • Cut back on your ‘entertainment’ expenses. Forego things like meals out, going to the movies, buying lunches, vacations, etc.
  • See if you can get a temporary, second job to build up your fund.
  • Cut down on your non-essential expenses.
  • Track your success in building up your emergency fund – make it a priority.

Eliminate your debt so you can start building an Emergency Fund

If you are unable to save enough to contribute to your emergency fund because you’re overwhelmed with high interest debt or lines of credit then it might be time to explore options to eliminate that debt.

Believe it or not, you can get out of debt in Ontario without declaring personal bankruptcy or resorting to costly debt consolidation loans. The government of Canada offers a little-known debt-relief program, called a consumer proposal. A consumer proposal can reduce your debt by up to 80% through a negotiated settlement with your creditors without interest or penalties. 

Only Licensed Insolvency Trustees (LIT) like us are federally regulated by the government to guide you through the process. We sincerely care about helping you.

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

Share This!

I can't praise Cori enough from David Sklar & Associates. Cori's acceptance and understanding of the diverse needs and concerns of her clients shines through with zero judgement. She made this process smooth and relieved much of my stress and anxiety around debt. Thank you!
Karen Swan
1713270908
My husband worked with Chen Siga, he walked us through our options and then through the process of getting everything done. Everyone we dealt with was very helpful. Overall a wonder experience, we are so glad we contacted them and got the help we needed.
Amanda Thomas
1712858943
I have been surviving on paycheck-to-paycheck basis and could not go any further because the lending interests just accumulated beyond what I can afford. Fortunately, a good friend recommended Grace Cuffaro from David Sklar & Assoc. and I finally got to settle my financial obligations in a reasonable way. Don't go anywhere else; ignore those financial brokers and social media ads who just want more money from you - go directly to the people who can really save you from drowning in debt.
REX ADAME Southern Ontario Canada
1712776241
I recently had the privilege of working with Trina at David Sklar & Associates, and I cannot praise her enough. Trina’s commitment to her clients goes above and beyond the norm. Here’s why she stands out:Incredible Knowledge: Trina is well-informed and deeply understands her job. Her expertise shines through as she navigates complex processes effortlessly.Client-Centric Approach: Trina doesn’t just follow procedures; she genuinely cares about her clients. She takes the time to listen, empathize, and tailor solutions to their unique situations.Clear Communication: Explaining financial matters can be daunting, but Trina excels at breaking down each step of the process. Her clarity and patience make even the most intricate details understandable.Availability and Accommodation: Trina’s dedication extends beyond office hours. She accommodates last-minute changes and ensures her clients feel supported throughout their journey.In summary, Trina is a gem in the world of customer service. If you’re seeking debt resolution, don’t hesitate to reach out to David Sklar & Associates—and ask for Trina. You’ll be in capable, caring hands.Thank you, Trina, for making a difference!
Darren Augustin
1712689928
Jerry Janiec is very helpful and professional. Thank you.
Urszula Kazula
1712507303
Unbelievable people who just want to help and I'm thankful
David Siria
1712427778
Jackie is awesome!Thank you for pointing me in the right direction.
Cindy McCormick
1712371745
Professional, knowledgeable and people oriented. Unfortunately for me, I had to ask for their assistance a few time and never regret about their service. 5 out of 5. Highly recommended.
Alexander Mikhyeyev
1712355497
Jackie Stanley and her assistant Sarah have been so helpful with such an important matter to me and my family. thank you for all your help through this hard period of our lives.
Assia Tiholova
1712282632
Trina and her staff were great, excellent job explaining on what will be required of me regarding my situation. Very helpful staff. Would highly recommend Trina and her staff.
Randy Turner
1712278650
js_loader
DS david skalr icon

Book your free consultation.

Call 1-844-962-9200 or fill out the form below. We’ll do the rest.

Contact Us