
Written by: Lauren A. Jeffery, RP, MA, CEA, CTDP.
November 20, 2024.
What do emergency funds and debt management have in common? Lots of things, from
your attitudes and decisions on your perceived personal and financial risk as it relates to your
life and how you live it to how you spend or save money. Now, ask yourself if you are financially
prepared for a catastrophic event. Some of you may confidently think, “Yup!” but a large majority
of you will either disregard asking yourself the question or think a quiet “no” that is
accompanied by a sense (pit) of dread in your stomach. Further, there will be others who fall
somewhere between these two extremes.
A financial “nest egg” or plan for emergencies is prudent in today’s highly uncertain,
gig-centric, transactional, interconnected, near cashless, consumer-driven economy. Adequately
saving for one without the use of credit is challenging for many Canadians, as the national
individual debt level has risen by over 52% in the last decade and a half (Fuss et al., 2024). This
means more Canadians rely on credit and hold debt to live—33% have credit card debt (Terrell,
2024). Many Canadians have precarious financial lives.
How do you save when you need credit to live? Recommending the creation and use of
a budget is solid, prudent advice that needs to continue. It’s a tool that can guide individuals
toward financial stability. But how do you ensure that the budget accurately reflects the
individual needs? As a licenced mental health professional, I can assure you that human beings
lie to themselves and others for all sorts of reasons, consciously or not, ALL THE TIME.
Understanding one’s relationship with money, debt, and “uncertainty” can be deeply
uncomfortable to think about, much less speak out loud to someone.
Planning for events that may not happen or aren’t expected for decades, like death or
decline of health and retirement, are unknown, abstract concepts humans struggle to
understand until they are faced with a life event. The top three reasons for insolvency in Canada
are job loss (income loss), health care, and financial mismanagement (debt accumulation)
(Chase, 2023)(Hoyes, Michalos & Associates Inc., 2020). Often, these life events can make an
already tenuous situation worse.
When planning for financial security and emergencies, it’s crucial to “play the tape to the
end,” meaning identifying all areas of your life that a life event will impact, even the happy ones!
When bringing a child into this world, there are differing income needs (more), different health
care requirements for mother AND child, providing a loving home and healthy food, access to
education, and environments to learn and grow.
For most, the present need for money changes daily, and the ability to respond to the
change may or may not be financially feasible, like continuing habits and
comfort/soothing/stimming behaviours, such as daily coffee/drink habits, eating takeout, buying
“treats” to reward oneself for getting through the day, etc when there has been a job loss. Or
maybe there are increases in expenditures to help cope with life stressors, such as massage
therapy, mental health treatment, prescriptions, vacations, subscription services, streaming and
gaming subscriptions, retail therapy, etc. Everyone copes differently, and everyone has different
amounts of financial freedom.
In today’s consumption-driven, socially hyperconnected world, balancing responsibilities
and obligations with enjoying life can be challenging. Managing your finances requires focus
and honest conversations to view how and why money is spent and saved objectively. This can
go a long way in developing realistic budgets and setting priorities and goals. If this feels like a
lot, think about talking to a professional to help you better understand yourself and your
relationship with money. When in doubt, reach out
Lauren A. Jeffery, RP, MA, CEA, CTDP. Lauren is the President of Point.Shift is a practice management expert, educator, and therapist focusing on the emotional intersection between advisors, clients, and money
- Website: www.point-shift.ca