Five Tips for Setting up a “Uh-Oh” Fund

By Randall Orser | Budget

Heading into the New Year is a good time to think about organizing your finances.  

Do you have a fund to cover those “UH-OH” moments? You know when, you lose your job, have an expensive vet bill, or your car breaks down!  Here are some tips on how to plan for these unexpected events by setting up an emergency fund.

  1. Open a savings account that you can access easily - ensure you can make withdrawals while still earning interest.  An Account Comparison Tool will help you find the right one.
  2. Be realistic with your savings plan – don’t worry about starting small. Determine what you can put aside each week or month to start right away.  Aim for a fund which covers 3-6 months of your regular expenses which might seem like a lot of money, but it can be achieved even if you start small.
  3. Make it a habit – set up automatic withdrawals from an account to your savings account or set up a reminder on your phone or computer.  Tuck away small change into a container, you will be amazed how quickly it adds up!
  4.  Eliminate a monthly expense and add it to your fund – simple things like bringing your lunch to work can add up over a month.  Think about things that you pay for now that you might be able to do without.  Here are some suggestions.           
    • Cut one non essential food from your grocery list.
    • Eat what you buy and definitely buy what you are definitely going to eat. Calculate how much money you waste by throwing food away (and Canadians are some of the worst people for doing this!) and it will shock you.
    • Make your coffee at home and take it to work
    • Use discount coupons
  5. Use an expense calculator to add up how much small daily expenses can accumulate over a year.
  6. Look for opportunities to increase your fund – review your goals regularly and adjust your contributions based on your circumstances.  Add any extra money you receive to your fund for example a tax refund.
  7. When shopping at a big box store, calculate how much it will cost, take that amount in cash to pay for your items and leave your bank card at home.  That way you will not be tempted to buy things that you don’t really need.  

There are lots of other ways to painlessly save money - talk to your friends and compare tips and ideas

Follow

About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.