Start an Emergency Fund... Now!

We’ve all been there. Staring down at our last pay cheque wondering how on earth can two of these per month possibly lead to achieving any of our life long goals.

By the time you pay off the mortgage bill, OSAP loans, credit card debt, Netflix and Amazon Prime subscriptions, you probably have nothing left to take home except for your pride and dignity.

In this blog, I'll show you how to become financially free in a reasonable amount of time, no matter what situation you are in. Let’s start with building an Emergency Fund.

“You are richer than you think.” We’ve all heard this but no one believes it. How does opening a checkings account with Scotiabank on a 3 digit bi-weekly pay cheque make me any richer?

The answer to that I do not know, however the slogan is true. We ARE richer than we think, we just do dumb things like paying interest at rates that make no sense whatsoever (yes, the 25% interest on your 4th Visa Travel card).

Ok, so what is an Emergency Fund and how is this going to help me get rich?

1. An Emergency Fund is money set aside to cover any unexpected events that life might throw at you and trust me there's a bunch of them.
2. This will make you rich because instead of borrowing money (at high interest rates) which you pay an arm and a leg to do, you will be able to pull from the money you saved up in your emergency fund just for these situations. BYE BYE INTEREST.
3. Remember to Rinse and Repeat. If your 1998 Honda Civic breaks down again just after you spent your last pay cheque on a full carbon fiber car wrap for the same Civic (this may or may not be a true story), just remember to top up your emergency fund when the next paycheque rolls through.

Seems simple, so how much should you save?

Start with $1000, and gradually increase this until you get to 3-6 months of your expenses. If you feel that your income stream is not as reliable, then feel free to build this up closer to 1 year of expenses. Think of this as self made life insurance on your path to getting rich.

As a guideline, try saving 10% of your paycheck each month until your emergency fund is full. Your goal is to get this done as fast as you can.