Everyone feels financial strain from time to time. Some months are difficult, especially following birthdays or holidays. But the number of Canadians struggling to make ends meet is growing rapidly – nearly half of all Canadian workers are living paycheck to paycheck and about one third of them feel the extended burden of overwhelming debt on top of their unstable footing. In a working climate as precarious as this it can be incredibly difficult to make it through a month when a pipe bursts, or when your car needs a new tire.
Across the border, 40 percent of American adults don’t have even $400 set aside for emergencies, and Canadians don’t fare much better. One solution to a short term financial bind is to look into online payday loans. These are short in duration, typically received about a week or so before your pay is expected. These are great options for those in need of relief in an emergency and can be deposited into your account the same day you apply.
Short-term loans act as an infusion of cash to cover whatever difficulty you have been handed, from something as simple as groceries for the week to fixing your home’s heating in the dead of winter – or better yet making furnace repairs in anticipation. Loans of this nature are often less than $1000, so you can pay them back in-full when you do receive your next salary check in order to minimize accrued interest. However, due to the relatively small loan amount, you can likely have it paid in-full after a second month if you are still shaky without too much pain.
A Step-by-Step Plan to Improve Your Financial Health
But how can this cycle of financial hardship be broken for good? Whether you are feeling an extra squeeze or simply want to feel the freedom of some extra cash set aside, it is important to come up with a plan to improve your financial health, today. The first thing you can do is evaluate your current spending habits.
The average Canadian doesn’t keep track of spending, and has no idea just how much cash is flowing back out of their accounts every month. Step one to financial security is staving off unnecessary spending habits: for example, if you buy a cup of coffee on your way to the office every morning, consider investing in a travel mug instead and bringing a cup from home. Even one simple change like this can save you hundreds of dollars a year, setting you on the path to stability.
Building an emergency fund is another step in the right direction. While you obviously must continue paying down credit card or other loan debts every month at your regular schedule, setting aside even a few dollars every week or month will get the ball rolling.
Generally speaking, you should try to set aside the cost of essential spending to cover three to six months. This varies depending on your household and employment situation: as a single worker who commutes to the office, you can find safety in a lower figure. However, if you are the sole breadwinner in a family of five and work in a high risk career such as steel fabrication, construction, or logging you should aim for six months coverage or beyond.
Emergency savings should be kept separate from regular investments like stocks or bank CDs. You never know when you will need cash to cover an emergency and it needs to be readily available. With an extra lump set aside, you could even take out a loan or use your credit card to pay for an expense in full or part, and utilize your emergency savings to cover a part in order to cut down on your loan amount and repayment time.
Responsible financial planning is essential to maintaining your senses in today’s world. Taking out stopgap loans responsibly and building a safety net should be a priority in your financial future in order to ensure stress-free budgeting for the coming months and years.
