We all heard about saving for a rainy day; it is instilled in us from a young age and for many of us it is art of our financial lives. However, in this age of austerity it is harder than ever to start putting together a nest egg for when unforeseen emergency may arise.

Life, as we all know, is unpredictable; we get ill, houses flood and hurricanes hit, it is just part of life. What many families don’t consider though, is how they would manage financially in times of extreme crisis: whether it’s saving for a fund, making sure you are insured or what credit options may be available to you. Having an emergency plan in place such as this is important and can certainly make the stress a little easier to handle.

Before, we look at how we can make small changes to our spending in order to save money; we need to understand what we can do to rectify a financial emergency if we don’t have a fund. Financial emergencies can be caused by a number of factors, from medical bills, house repairs and unexpected utility issues. Whatever the form of emergency, each one is stressful on both yourself and your children. If you don’t have the funds to cover these unexpected payments, then you could incur late payment charges or similar; it is this situation that short-term loans like those of Payday loans from Dollars Direct Canada can help.  This form of loan is designed for emergency use to help you in between paychecks. If you feel that you are in the midst of a financial crisis, then have a search online to see what loan options are available for you.

Create your budget plan

The first thing to consider when looking to start your emergency fund is a clear and precise budget. This will need you to really look at your finances under a microscope, a difficult thing for many people to do. Start with your incoming cash and then the expenditure that has to go out. This could include your mortgage, bills, childcare, school fees, food etc. This will give you a basis to start working from.

Once you can see the cash you will have left over every month, then you will have a clear idea of the amount that you can actually afford to save. Remember, it doesn’t matter if you can only afford $30 a month, that amount will soon add up over the years. When creating your budget it is also worth considering the area that you live in and if this poses any emergency risk, high flood risk, forest fire issues, earthquakes etc. Not something anyone wants to think about, but in reality, this can help you to save more if you are at immediate risk.

Small ways to save BIG

Each month we all make regular small payments for life style things we may want, whether this is lunch money for the children or a latte on the way to work. It is these payments that you need to consider stopping and saving the money. In general, you may not think that cutting out a latte will really save you a decent amount of money, but in reality that $5 a day will add up to around $150 a month – now that is a nice amount for an emergency fund.

Don’t worry though, you don’t have to cut out that coffee or shop brought lunch every day. Instead, consider making your own latte and a packed lunch from time to time. It may take your children a little getting used to, but you can be creative with what they are eating and be secure that you are covered financially.

Finally, there are other emergency financial needs that you may want to explore. It is always important to keep you insurance up to date, whether it’s vehicle, home or contents insurance, having this up to date and within easy access is very important to reducing your stress.