Language selection

Search

Protecting your financial well-being

Financial risk management

It is impossible to eliminate all of your financial risk; however, there are strategies that can be used to avoid and minimize risk, and even help protect yourself from it. These are outlined below.

Selective insurance coverage

There are many kinds of insurance, from life, health and disability insurance to home, auto and even travel insurance. In choosing your coverage, it is important to recognize what insurance types constitute a need, and which could be characterized as a want, as well as the extent of coverage needed. A professional insurance representative can help you in this, but be wary of unnecessary fees.

Be sure to compare prices to make sure you are paying a fair rate. Before buying insurance, look at all of the protection you currently have, either privately or through your employer. Keep in mind that some types of insurance are very expensive and may not be necessary for your specific needs.

Emergency savings

For example: vehicle repairs, health issues, home repairs, and/or loss of income.

One of the best financial risk management strategies is an emergency savings fund. This type of fund puts you in control. It can also help protect your financial stability and ensure your financial security.

An emergency savings fund is a part of your income that you set aside in case of a financial problem. Emergency savings can prevent you from having to borrow money to pay for an unexpected event.

It is important to remember that this module focusses on post insolvency success and preparation.

Please keep in mind that if you are currently going through the insolvency process, you might not have enough income to save for your financial goals.

This module is meant to help you plan for your financial future and consider your financial goals before your discharge. However, you might not be able to start saving and budgeting for your goals until after your insolvency is complete.

Here’s how you can setup your emergency savings fund:

  • Use the “emergency fund” section of your budgeting template for emergency savings
  • Keep the money in a separate savings account and ask your bank to automatically transfer a small amount of your monthly income to your emergency fund (savings account) each month
  • Don’t spend your emergency fund on non-emergency expenses

Other types of emergency savings

Many people do not have the ability to set aside some of their monthly income for emergencies. An alternative to having emergency cash savings would be to start a small emergency non-perishable food fund. Every time you shop for groceries, consider buying just a few non-perishables to store in a special place for emergencies. When an emergency hits, you can use the regular food budget to handle it and you will be able to feed yourself using your emergency food supply.

Transcription — Emergency Savings

[The background of the screen is an image of a bright blue sky with colorful confetti falling from the clouds. An image of a baby stroller, a dog, a diamond ring, a present, a trophy, and a suitcase appear consecutively on the sky background.]

Narrator: Life is full of surprises and it can throw you unexpected financial curve balls, such as a car accident, having a medical emergency, or losing your job.

[The images disappear from the sky background. An image of a car crash, a hospital, and a sad man walking away from his work cubicle holding a box of his belongs appear consecutively on top of the sky background.]

[The scene changes to an image of a first-aid kit with money sticking out of the top. The words "Emergency savings fund" are written above the image.]

Narrator: In order to be better prepared to handle these surprises, one of the best financial risk management strategies is an emergency savings fund.

[The scene changes to Steve falling.]

Narrator: An emergency savings fund is like having a safety net.

[Steve falls into a net which says "Emergency savings fund" along the bottom.]

[The scene changes to an image of a paycheque on the left side of the screen. Money moves from the paycheque to an image of a first-aid kit with money sticking out of the top on the right side of the screen. The words "Emergency savings fund" are written above the image of the first-aid kit.]

Narrator: It's an amount of your income which is set aside in case of a financial problem.

[The image of the paycheque disappears and the image of the first-aid kit shifts to the top center of the screen. The words "Budget" and "Avoid borrowing money" appear below the image of the first-aid kit.]

Narrator: Emergency savings can allow you to stay on budget and prevent you from having to borrow money in order to pay for an unplanned event.

[Checkmarks appear next to the words "Budget" and "Avoid borrowing money".]

[The scene changes to Emilie sitting at a desk in her home office as she sets up her emergency savings fund.]

Narrator: This is Emilie. Emilie is about to start setting up her emergency savings fund.

[The scene changes to an image of Emilie's Budgeting Template. The screen zooms in on the savings section of her Budgeting Template and the "Emergency fund" section is circled in red.]

Narrator: To begin, she uses the Emergency fund section of her budget to enter in the amount she wants to contribute to her emergency savings.

[The scene changes to a screen with an image of a bank, a piggybank, and a safe. The word "Chequing" is written underneath the image of a bank, the word "Savings" is written underneath the image of a piggybank, and the word "Emergency savings" is written underneath the image of a safe.]

Narrator: She then puts her emergency savings money into a separate savings account from the rest of her money.

[Images of money are moving from the top of the screen into the image of the safe.]

[The scene changes to Emilie talking to a bank teller.]

Narrator: Emilie decides to ask her bank to automatically transfer a small amount of her income into her emergency savings fund each month.

[The scene changes to an image of a paycheque on the left side of the screen. Money moves from the paycheque to an image of a safe on the right side of the screen. The words "Emergency savings" are written underneath the image of the safe.]

[The scene changes to Emilie looking at a pair of shoes in a boutique.]

Narrator: Lastly, Emilie must not spend her emergency fund savings on non-emergency expenses.

[The scene changes to Emilie placing the pair of shoes on the check-out counter of the boutique. The total cost for the shoes comes up to $98.07.]

[Emilie places an envelope on the check-out counter next to the pair of shoes. The words "Emergency savings" are written on the envelope.]

Narrator: An emergency fund is money for an emergency.

[An image of a red circle with a diagonal line through it appears on top of the image of the emergency savings envelope.]

Narrator: It's important to think of an emergency fund as separate from other long-term savings goals.

[The scene changes to Steve sitting at home in his living room looking at a piece of paper and thinking about setting up an emergency savings fund.]

Narrator: This is Steve. Steve also wants to setup an emergency savings fund for any unexpected expenses.

[The scene changes to an image of a paycheque on the left side of the screen. Money moves from the paycheque to an image of a first-aid kit with money sticking out of the top on the right side of the screen. The words "Emergency savings fund" are written above the image of the first-aid kit.]

Narrator: However, unlike Emilie, Steve does not have the ability to set aside some of his income each month for emergencies.

[An image of a red circle with a diagonal line through it appears on top of the image of the paycheque.]

[The scene changes to an image of Steve thinking about an emergency fund of food items.]

Steve considers his options and he decides to start a small emergency fund of non-perishable food items.

[The scene changes to Steve pushing a shopping cart through a grocery store and putting a few non-perishable food items into his cart.]

Narrator: When Steve goes grocery shopping, he sometimes purchases a few additional non-perishable food items to build up his emergency savings fund.

[The scene changes to Steve placing the food items on a shelf at home for future use.]

Steve stores the non-perishable food items in a special place for emergencies.

[The scene changes to Steve and Emilie cooking together in their kitchen.]

Narrator: If an unexpected emergency takes place, then Steve will be able to use his emergency food supply as his food for the month.

[The scene changes to Steve standing on the road looking at his broken down car. Steve scratches his head and thinks about his emergency food supply at home.]

Narrator: Therefore Steve can use the money he had budgeted for food at the beginning of the month to help cover his unexpected expenses.

[The scene changes to an image of a first-aid kit with money sticking out of the top. The words "Emergency savings funds" are written above the image.]

Narrator: Consider having an emergency savings!

[The scene changes to Emilie and Steve sitting in an office setting with their BIA Insolvency Counsellor.]

Narrator: At your in-person counselling session discuss emergency savings with your BIA Insolvency Counsellor.

Saving

Saving puts you in control!

If possible, you can start saving on a regular basis to prepare for emergencies and save for large expenses. Many financial goals rely on savings, which gives you the ability to make choices rather than going from one spending emergency to another.

Why saving is important:

  • Helps you manage financial risks and gives you security (as you learned above)
  • Helps you achieve important goals without having to borrow money
  • Gives you choices and more financial freedom

Strategies for saving

One strategy for saving is to “pay yourself first”. This is an effective strategy to make sure you reach your savings target every month. It reduces the temptation to skip a contribution and spend the money on something else.

This strategy involves automatically directing your specified savings from your paycheque. You can do this by speaking with your payroll administrator. Your paycheque can be split into two parts, or your bank can make an automatic transfer.

The money is then automatically taken from your paycheque and put into your savings account. This allows you to pay yourself before paying your monthly living expenses and making unnecessary purchases. This approach works best when your paycheques are consistent.

image of debtor with counsellor

If you have questions, write them down and bring them to your in-person counselling session.

top of page

Date modified: