Life Happens Funds + Savings Strategies

This week at Untangle Money we are excited to feature a guest blog post from our friends at QUBER!

Let's dive right in!

Life happens - there’s not much you can do to prevent unexpected expenses from coming up. Whether it be something large, like an unplanned home repair, or something smaller, like buying a last-minute present, there are a million events in life that require a quick financial remedy.

Credit can be helpful to cover the costs of these events in their immediate aftermath. However, if you can’t repay the amount you’ve charged to your card on time, it could have some seriously negative consequences for your financial health. Falling behind on credit card payments can cost you extra interest fees, increase your interest rate and lower your credit score.

Instead, if you’re able to cover some (or all) of the cost of these events with liquid cash, you minimize the odds that these negative outcomes will happen to you. Even if you do have to use credit to cover some of your expenses, you’ll be able to catch up on payments quicker and get back on track with your life sooner than you would have without your savings.

That’s why it’s important to have a “life happens” fund. Also known as an emergency fund, this is a pool of money meant to be pulled from when you face unexpected expenses. Rent, car payments and other fixed costs can be planned for, but others, like a sudden loss of income, might surprise you. If such a situation happens to you, having a life happens fund will help you handle your short-term financial needs more effectively, giving you peace of mind even when things don’t go as planned.

For women, having a pool of savings like this is extremely important. Globally, it’s estimated that women and girls are responsible for 75% of unpaid care and domestic work. This divide implies an uneven financial burden for women when it comes to family care. As an example, a single mom may be independently responsible to cover the costs of their children’s activities while also helping their elderly parent with the cost of regular prescriptions.

Women also face the gender wage gap. Even though women make up close to half of the workforce in our country, Canadian women are still earning considerably less than their male counterparts in every industry. Based on statistics from 2018, Canadian women earned $0.87 for every $1 earned by Canadian men.

This, coupled with the stats on gendered family care, means that many women have less disposable income to put towards managing the costs of more frequent “life happens” events. This kind of disparity not only increases the financial burden most women must face, but also greatly increases the level of stress they’re prone to experiencing. As such, having an independent emergency fund is an essential for all women, even if they have a partner in their lives.

When it comes to determining a goal for your life happens fund, the Government of Canada recommends saving around 3 to 6 months of your expenses or 3 to 6 months of your income, as these two amounts are very similar for most people. However, this is a medium-term financial goal, meaning the average person won’t be able to reach it in less than two years. To start, it makes more sense to instead aim for a smaller saving target, like $1000. This will make the goal feel more attainable and will help you develop your routine with regular saving.

If you’re new to creating a life happens fund, here are a few more tips to help you get started.

Separate your savings

To grow your savings effectively, you’ll need a bank account dedicated solely to them. By trying to manage everything in the account you do your day-to-day spending from, you put yourself in jeopardy of slowly spending your savings over time. Instead, having a separate account (preferably with no associated debit card) will keep your savings distinct from your spending money. This will minimize the possibility of accidentally spending too much of your life happens fund before you need to pull from it.

Automate your savings

By automating your savings, you eliminate the chance of forgetting to save, or short-changing yourself by saving less than you should. By setting up automated transfers to your saving account, preferably happening right after you get paid, you’ll always be saving a consistent amount each pay cycle. Even $20 a week adds up over time!

If you’re unsure of how to automate your savings, QUBER can make the process easy, secure and fun. Round up to the nearest dollar on coffees, tax yourself on every grocery purchase or try a Saving Challenge and earn a 2% cash reward when you finish. With QUBER, you can customize your automation process and learn to grow your savings in a way that works for you! If you’re interested in getting started, click here.

Watch your spending

Always remember that saving and spending habits are inextricably linked - you can’t be an effective saver if you’re a careless spender. Even if you’re saving regularly, spending more than you can afford to means you’ll likely have to pull from what you’ve saved to cover your bills anyways.

Look for ways to reduce your spending on non-essentials where you can. This could be done by minimizing your grocery bill, getting rid of subscription services you don’t use or by taking public transit where you can. You might be surprised at how much extra money you could be putting away by taking a critical look at your spending patterns!

Save your windfalls

Whenever you receive money from outside your regular source of income, save it! This kind of money is known as a windfall, and could come from a variety of sources, such as contest winnings, gifts from friends and relatives, profit from selling belongings or your tax return. Saving this money instead of spending it is a great way to get ahead without having to reduce the amount of disposable income you have to use.

Save with goals in mind

Finally, saving money is much, much easier if you’re saving with a specific goal in mind. For some, it might be a dream vacation, while others may be looking to purchase a home. If you’re trying to build a life happens fund, you could use the peace of mind that comes with a well-tended fund as your goal. Alternatively, you could remind yourself that you won’t be able to reach your other goals without a life happens fund – if you don’t have one, you’ll always have to pull from your savings for those goals to cover your unexpected expenses anyways.

The short-term gratification that comes from buying what you want can be tough to say no to at times, but financial stability is one of the greatest gifts you can give yourself. So, keep a desired outcome in mind as you save. A goal you really want to achieve is an excellent motivator to keep going and stay on track when you feel tempted to overspend.

What's next?

You can checkout the Quber website here, and follow them over on Instagram, Twitter, Facebook, and LinkedIn!

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