Emergency Fund (EF): Excuses, Excuses…

“I don’t need an EF I have insurance”

Ok, so you decided that you don’t need an EF because you have insurance. First of all there are lots of different types of insurance such as property, disability, and life insurance. Some employers offer this as part of their contract or union agreement. For example I know a couple people who worked for the municipal government and were in severe accidents. One was riding his bike to work and was hit by a car. The other was my Dad, who as I previously mentioned fell through a window and sliced through his artery. In both accounts the city was able to provide both short and long-term disability. The man who was hit by the bike was off for 2 years, my Dad is still off but it’s looking like he won’t be back to work anytime soon.

I am so pleased that companies such as the city offer benefits like this and when you add it to an existing insurance policy on your mortgage things could just be hunky dory. Right? Not necessarily. While these benefits are there, they require a lot of paperwork and time to get going. So while you are being rushed to the hospital is your first thought really going to be “hmmm am I going to be off work for more than 3 days? I should really call my supervisor and figure this paperwork out” probably not. In those first few days you are going to still need money. Your spouse (family etc.) is probably spending lots of money in gas so they can and see you often, they are also probably paying a premium for parking at the hospital (which can run upwards of $20-30/day). They are also probably eating out because they don’t have time or energy to cook for themselves. etc. etc. While plenty of people are fine throwing these expenses onto the credit card or line of credit keep in mind that doing so means that parking spot is going to end up costing you a lot more than $20 once you take interest into account.  Then, probably while still dealing with the aftermath of the emergency,  you are going to have to come with a plan to readjust your budget to pay off the debt you have now incurred for something “unforeseeable” (was it really unforeseeable? Something, somewhere along the line is going to happen to each of us pretending it won’t happen to you is ludicrous).

Having these types of insurance and benefits are wonderful but should only play a role in how much you have to save rather than whether or not you should save at all. It is also vital that you learn as much as you can about the policies your job has in place for emergencies. Too often we start a job and glaze over all the paperwork, not really paying attention to what we are signing. It is your right to know the employers policy and how benefits work. You are asking for trouble if you don’t ask those questions.

“I don’t need an EF I pay into Employment Insurance for a reason”

So you lose your job? No biggie that’s what Employment Insurance is for right? I’m guessing you have never actually tried to file an E.I. claim then? I found out I was pregnant in January and was basically forced out of my job soon after (long story!). I knew I needed to find another job but in the meantime wanted to collect E.I. It took so long for my company to issue my record of employment that by the time they did I had another job lined up and didn’t think it was worth it to apply for EI. Still, I went almost 2 months with no income. Good thing I had savings!

Now my contract ended with my last job when I was 7 months pregnant. I was told when I was hired  there was a strong possibility of extension but that extension didn’t come through. So just shy of 3 months left in pregnancy I was again left without a job. I went down to the E.I. office to discuss my dilemma and they told me to apply for maternity leave because no one was going to hire me for 3 months. I completed the application on July 4. It’s now July 25 and they are still “processing” my application and waiting on the record of employment! Good thing I knew my contract may end and I was able to squirrel some money away so I have been able to pay my bills without dipping into my emergency fund. However, if I had been an idiot and continued to spend without thinking and didn’t have an emergency fund, I would already be in debt (or have overdue bills) to the tune of $1200 (and my expenses are cheap compared to a lot of other peoples).  I still have no idea if my EI claim will even be accepted and if it is I have no idea how much I will get. A little scary.

Jobs end for so many reasons, job stability is often seen as a sign of the past. Don’t be an idiot…prepare for the worst & enjoy the best.
Please tell me I have sold you on the need for an EF now??

Apparently I got a little carried away with story time and don’t want to keep dragging this post out so I will explain to you in full how you can start an EF next week. I promise it is so easy you will wonder why you didn’t do it years ago!

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