TORONTO -- There are many Canadians living close to the margin. The Canadian Payroll Association has found over the the years that roughly 43% of Canadians are living paycheque to paycheque. For many, even if they wanted to tuck some money aside for an emergency fund it is simply out of the question. However, there are others who, with a little tweaking, just might be able to set themselves up for financial success when thrown a curveball.

COVID-19 has taught us many things and a standout for me is the need for an emergency fund with at least 3-6 months living expenses set aside in cash in the event a crisis strikes when you least expect it. Sure this is ideal and saving for it doesn't happen overnight.

Is this a reasonable expectation? I believe so, with a little tweaking.

I've always been a fan of paying off high interest credit card debt as aggressively as possible. However, for those who on a monthly basis are straddling the break-even line, I might alter my approach a little.

Here is why, cash is king right now.

Having a little cash can prevent a challenging financial situation from spiralling completely out of control. I'm not talking about 3-6 months living expenses but I am talking about $500 - $1,000 in cash available to you.

How do you go about building this cash reserve? Here are a few ideas. This might cost you in the long run but a financial lifeline is about staying afloat right now.

  1. Considering deferring your mortgage payment and realigning the payment toward an emergency fund
  2. Make only the minimum payments on your outstanding credit cards even if you can afford to pay it off in full
  3. Consider selling unused and unwanted goods in the secondhand market
  4. Offer up your services, babysit for a family struggling to juggle work-life balance right now, consider a side hustle
  5. Pick up a part-time job. You will still qualify for the CERB if you make less than $1,000 a month
  6. Dissect your budget line by line, looking for small tweaks to cut out spending, clip coupons and eliminate discretionary services (if you haven't signed a contract you can cut it)
  7. Use your tax refund as an emergency fund base
  8. Consider using a credit card or line of credit as your emergency fund....promise yourself not to use these products unless it is an actual emergency but having it available to you can provide comfort
  9. Download apps, products and tools to help you save and manage your money. Ensure they are Canadian-based but there are countless budget, spending, coupon apps, as well as financial calculators and even flyer sales apps. Small amounts add up. There are a handful of apps that that will round up small amounts when you make a purchase and directly deposit the difference into your emergency fund account. It is a forced savings that is quite effective.
  10. Start walking or use public transportation, fix and clean things yourself, do the obvious and eat in and source out activities that are free

There is one more trick that we have used in our household. Break down your day into sections. For example, don't spend any money from 6:00 a.m. to 12:00 p.m. and take the money you would have normally spent on coffee, snacks or even an unnecessary purchase and immediately transfer it to your emergency fund. Do the same thing in the afternoon. You get where I'm coming from. Small amounts can lead to big changes and before you know it you will have a financial cushion that can get you through a difficult situation when you least expect it.