In life, it’s a bit of a given that we’re going to face some rough patches. I guess that’s why they say: “Into each life a little rain must fall”. Whether it’s an unexpectedly long patch of unemployment, an injury or long term disability that keeps you from working, or even just an extraordinary number of large expenses that seem to hit one after another, there are some things you can do to help soften the blow.
Be Debt Conscious
Let’s face it. Most of us won’t be able to get through life without ever having any debt. School loans, a mortgage, car loans and credit card debt are pretty common in most households. When it comes to school loans or a mortgage, borrowing that money can help start you off on the right path as you try to make your dreams a reality. However, as we get used to debt and are constantly encouraged to borrow, it can feel like it’s so easy to borrow money that we forget we will eventually have to pay that money back! When life is rosy and money is flowing in regularly, it’s not usually a big deal. But, often when unexpected setbacks hit in life, that debt can exacerbate the problem. So, what’s the solution? Borrow responsibly. Just because you can borrow money, doesn’t mean you should.
- Consider saving for a ‘luxury’ item and then purchase it when you have the money in hand rather than borrowing and paying for it later. Not only will you save the loan interest, you may even earn interest as you save!
- If you already have a lot of debt, talk to your financial institution about the possibility of a consolidation loan. By consolidating your debt, you may be able to pay back your debt at a lower interest rate and only have one debt payment to manage rather than several.
- There are many benefits to using a credit card. Not only are they necessary for most hotel reservations, airline tickets and online purchases but they often come with some very profitable rewards systems. Just be conservative when using your card. Try not to pay for anything with your credit card that you won’t be able to pay off quickly. The interest on most credit cards is high, so be sure you can afford the interest before you make your purchase.
Build a savings buffer, or if you prefer, a rainy day fund. Try saving a set amount from your paycheque each month. Even if you can only afford to save $50 – $100/ month, over time it will add up. You can set up a monthly automated transfer from your chequing account to your savings account and then you don’t even have to think about it. It will just happen. Not only will you have money set aside in case of an emergency, you could even accumulate interest on your savings as well! Most experts recommend that you should have between 3 and 6 months wages saved in case of an emergency. You might not want that much sitting around in a low interest savings account but one of our exceptional staff will be able to help you determine the best way for you to structure your savings.
We can’t control what kinds of difficulties life may throw at us but we can do our best to prepare for them. If you would like help developing a financial rainy day strategy, contact us to make an appointment and we’d be happy to help.