The average Canadian has just $200 or less in savings – a statistic that was taken before the COVID-19 crisis caused job losses and businesses to shut down.
The amount of stress and worry that can come with a lack of savings or emergency fund can take a significant toll on our mental and physical health. The good news is that there are simple strategies you can use to start rebuilding your emergency fund.
While it may sound daunting, getting back on track with your financial health is absolutely within reach.
How can we put money away when finances are tight? It’s time to be resourceful and get creative. There are small steps you can take right now.
Track your spending
No one likes to think they’re spending their money frivolously, but it’s really easy to lose track of where every dollar goes. You don’t have to develop a complicated, time-consuming budget, simply record every purchase you make for one week. For an even clearer picture, do this for one full month. Look closely at each expenditure you’ve recorded and consider where you might be able to cut back.
Trim current expenses
Now that you’ve examined where your money is actually going, decide what can be trimmed. Are your subscriptions necessary? Have you been outsourcing any tasks you could be doing yourself? Can you cut back on takeout or dining out?
Look for new opportunities to save
No one wants to be overpaying for essentials. If your weekly grocery bill is too high, make sure you are shopping at a store that offers the best deals for your needs. Sign up for free points programs where you can be rewarded with lower prices on items you buy often and redeem points to lower the cost of your grocery spend. Look for better-priced options in every single spending category: personal care, hobbies, home repair, etc.
Most of us have more than we need. There’s no use holding onto things that aren’t being used, so get in the habit of decluttering regularly and selling unwanted items. Many consignment and second-hand stores would be happy to take your stuff.
When you do find savings, put that money away
As soon as you’ve recouped an amount—no matter how small—transfer it immediately into your savings account. Twenty dollars saved from making your own coffee every day will be of no benefit if you just end up spending it on something else. Deposit saved money directly into your emergency fund. Once you get into the habit of socking money away, you’ll find yourself looking for more opportunities to save.
Invest in your own personal financial education
To help move toward a more financially secure future, invest in your own personal financial education. Learn as much as you can about your credit score, bad credit loans, managing debt, debt consolidation, saving and budgeting. Free, credible online resources are a great place to start improving your financial literacy today.
“Financial literacy is disappearing from the school curriculum, and as a result, many Canadians aren’t taught the fundamentals of managing money, the importance of maintaining credit, and how to manage debt until they find themselves in financial hardship,” says Andrea Fiederer, Executive Vice President and Chief Marketing Officer, easyfinancial.
“We know that 48% of non-prime Canadians turn to online resources to learn about how to better their finances but with an overwhelming amount of information out there, it’s hard to even know where to start. With content that is tailored to each visitor’s needs, we know that through goeasy academy, Canadians can begin to learn and develop the necessary skills to successfully manage their finances and make sound financial decisions for the long term.”
When building an emergency fund, take the long view. Don’t worry if the amounts you’re able to set aside seem small, they do add up. Every bit of savings represents a positive step forward in your finances; you’re creating good financial habits and actively taking steps to improve your situation.