Much like earthquake readiness, many of us aren’t as well prepared as we would like to be to weather a personal financial crisis. Here are some tips that will allow you to plan for the unforeseen today and relieve some of that financial anxiety!
1. Build up an Emergency Fund
No one likes to think about emergencies, but they’re a reality: unexpected job loss, home repairs, car problems or travel expenses. Whether you’re putting away a percentage of your monthly income, eating out less or asking yourself if you really need that new item, you can start small to save big.
2. Consolidate Debt
Consider paying down any credit card balances as a priority. Interest rates can be high and the minimum monthly payment can take up to 10 years to pay off depending on how much you owe. Paying less interest mobilizes your savings capacity.
3. Diversify Term Deposits
If your money is invested in term deposits, stagger the maturity dates so they become due at different times. Not only will this allow you to take advantage of changing interest rates, it will also ensure you have access to funds at different times, should a life event arise.
4. Contribute to an RRSP
Looking long term, another great way to build savings is to set up a monthly deposit to a Registered Retirement Savings Plan (RRSP). Topping up that investment through an RRSP loan can be a great way to build your financial security for a rainy day.
5. Get a Tax Free Savings Account (TFSA)
Consider the benefits of a Tax Free Savings Account (TFSA) to grow your money tax free. If needed for an emergency, TFSA funds can be withdrawn without penalty or withholding tax – an ideal way to form a new savings habit.
We can’t control life’s surprises, but a little preparation today can offer a lot of relief when you need it most.
Tracy Nettles, Mobile Financial Advisor,
Sunshine Coast Credit Union