When it comes to making budget priorities, planning for the unexpected can often get short shrift. And no wonder. Who really wants to prioritize emergency funds or insurance premiums over goals like owning your own home, making sure your children get a great education or putting money toward a cause that really matters to you?
Perhaps what’s needed is a shift in thinking. It’s precisely because your other goals are so valuable that a plan for the unexpected is so important. Without a proper plan in place, a sudden emergency — for example, a loss of income for you or your partner, or an unexpected expense — can put all your carefully budgeted dreams in jeopardy.
What should I do first?
No matter your circumstances, an emergency fund is your first line of defence when the unexpected strikes. As an ideal minimum, it’s recommended that this fund be enough to cover your core expenses for three to six months.
Depending on how tight your budget is, however, having this amount on hand might be easier said than done. If this sounds like you, a good idea is to set up an automatic monthly or biweekly transfer into a high-interest savings account. By continually putting even small amounts into your emergency fund, you’ll at least have something to turn to when life goes sideways, putting your other budgeting priorities at risk.
Interested in more tips on planning for the unexpected? Go to vancity.com/tchealthchallenge.
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