The Importance of Saving for a Rainy Day
When life is comfortable and things are going well, it’s hard to think about experiencing harder times. But failing to plan for stormier days can have a devastating impact on your financial health. Life is full of surprises, and some of them can be expensive. Whether it’s a medical emergency, job loss, car repairs or any other unforeseen event, having a financial safety net can provide a sense of security and stability. Let’s take a look at why it’s so important to save for rainy days.
Stay out of debt
Did you know that according to Statistics Canada, one in four Canadians are unable to cover an unexpected expense of $500? And yet, emergencies do not discriminate –they can, and do, happen to those who are unprepared just as much as to those who are prepared. When life throws an expensive surprise your way, and you don’t have the funds to cover it, you may fall into debt just to get by. You may choose to swipe the plastic, borrow more than you can afford or fall behind on your monthly payments in order to cover the cost of the emergency.
Unfortunately, this can lead to months, or even years, in debt, as consumer debt tends to have high interest rates and can be difficult to repay. On the flip side, if you had a well-padded emergency fund prepared, you would have the cash you needed to fall back on in case of an emergency. This would help you stay out of the debt cycle and keep you financially fit, no matter what life throws your way.