Covid has undoubtedly highlighted the need for everyone to have an emergency fund. Here are six key factors to consider when planning for the unexpected.

We usually think of survival bags when preparing for the unexpected. If Covid has taught us anything, it’s that in an emergency, such as a pandemic, we can easily and quickly find ourselves out of work for an unknown period. This begs the question; how much should I save in case of an emergency, and how can I do so successfully?


Unexpected job loss is incredibly daunting, and during a pandemic like Covid, it is certainly not restricted to specific demographics. Did you know that “nearly three in 10 (28%) adults do not have any money set aside in case of an emergency”? – Bankrate.

With that in mind, it is extremely important to examine what your fixed monthly costs are, what wiggle room or insurance exists in the event of a crisis and which items or services you can forgo if need be.

Fixed Monthly Expenses | Your fixed monthly expenses include rent or mortgage, utilities, cell phone bills, car payments, insurance and the like. Most likely, you have automatic withdrawals set up for these payments. Without a regular paycheck, you will not only face penalties if you cannot continue to pay these but additional bank fees if these payments bounce. If you these expenses go onto your credit card, not only will you have a backlog to pay off, you will be paying a pretty penny on added interest as these payments add up. Financial advisors suggest, “you set aside three to six months’ worth of living expenses in an emergency fund” – CNBC. Their exact science behind that is in calculating the following:

  • The amount you make annually, plus taxes divided by 12 to calculate your monthly income.
  • Multiply that monthly amount by three or six, depending on how many months savings you want in your emergency fund.

Service Provider Protection | Many companies offer a protection plan in case of emergencies where you cannot pay your monthly bills. For example, credit card companies often off this protection plan for a flat rate added to your monthly account. While this may feel unnecessary, we can all agree that the deferrals offered over Spring and Summer this year saved our skins. Mortgages, car payments, insurance payments, utilities and credit providers all offered these deferrals free of charge during the pandemic. It is wise to familiarize yourself with your providers’ way of handling emergencies, for instance:

  • Which provisional plans exist for each company?
  • How long of a delay might you face when claiming financial help, especially if there is a crisis and companies are overloaded with demands?
  • Which penalties are you subject to if you forget or cannot pay your monthly bill once they resume?

Expendable Fixed Expenses | Most fixed expenses are not expendable; heating, electricity, rent or mortgage, insurance, etc. However, in the event of a pandemic, or if you fall ill and are unable to bring in your usual revenue over an extended time, there are certainly cuts you can make. For example, you could surely do without the following until your income steadies:

  • Vehicle and the cost of transit. They can be quickly taken out of the equation if you no longer need to commute to work or school. As a bonus, relying on a bicycle or your own two feet is excellent for your health! Walking helps you “maintain a healthy weight, prevent or manage various conditions, including heart disease, high blood pressure and type 2 diabetes, strengthen your bones and muscles, improve your mood and, improve your balance and coordination” – Mayo Clinic.
  • Consider cancelling your snow removal or lawn service and use your new-found free time to care for this yourself. “If you skip the service and mow yourself, you can save up to $1,200 a year, even after accounting for the cost of a push mower, gas and your time.” – CNBC.


Regularly putting away savings is easier said than done. While you likely want to acquire your savings and reach your goal amount as quickly as possible, you mustn’t acquire more debt or take away from your usual spending too much. In order to strike a balance, you will want to calculate your flexible income and expenses, and carefully select your savings account.

Assess Your Flexible Expenses | Your flexible expenses are what remain after fixed expenses are paid. For example, your grocery bill, entertainment expenses and clothing are all flexible in terms of how much you spend and when you spend it. When calculating how much you can cut back, remember:

  • Create a fluid assessment of your flexible revenue and set up a reasonable spending allowance. “It’s how much you can spend this month (on whatever you want) without worrying.” – Money Under 30.
    Giving yourself a general guideline will curb the need to overspend.
  • Use an app like Money Patrol to track spending and recurring charges so that you get a better picture of your flexible expenses and how much you can afford to put towards your savings.

Break Your Savings Plan into Small Steps | Trying to save for 3-6 months’ worth of revenue is a daunting task for anyone. Rather than setting yourself up to fail, break your savings plan down into smaller steps, such as:

  • Set your initial savings goal at $1000, enough to cover a car repair or unforeseen seasonal expense. Once you reach that goal, you will feel encouraged and take that positive experience to continue moving forward.
  • Try setting aside a small amount, like $40, from each paycheck. Without much notice, “if you were to save $40 from every paycheck, you’d reach $1,000 in 12 months.”. – My Money Coach.
    Again, this small achievement will fuel your ability to continue saving.

Compare Interest Rates and Promotions | Consider the going interest rates and monthly fees associated with a savings account. Financial institutions are competitive when it comes to their offerings. Check your local banks for offerings like the following:

  • Banks often run promotions where they will give you up to $500 just for opening and using an account at their branch. You can always revise your settings once you have received your financial bonus.
  • Tax-free savings accounts are an excellent option for long term savings. “TFSAs are usually preferable for both lower earners as well as those who think they may need to access their funds before retirement.” – Wealth Simple.

Just remember that when it comes to saving for an emergency fund, slow and steady runs the race.

While you may have a manageable plan in place to reach your goal, nothing is ever set in stone. Stay on track, even with unexpected expenses. Consider reaching out to us for a small loan. 24Cash is a local business based in Canada that provides various lending options to support hardworking Canadians