Many of us feel that if things are going well at present, nothing bad can happen. Although I’m not about to speak of doom and gloom, we all have moments in our lives where the unexpected arises and the financial hits are hard.

Its not difficult at all to save for these moments and with proper planning, it can only be easier.

Here are some tips that can make you better prepared financially:

1. Open a separate savings account where a bi-weekly deposit can be made without you doing anything.

Many banks have this function which can match the time at which your paycheck in deposited by your employer. I usually set mine at 5% of my pay. This is not a lot off each pay, but towards the end of the year, its the sum really started to get noticed.

Talk to your local bank to find an account where you do not have to pay any service charges as that will only eat into your savings jar. Some might even offer interest on the amount you deposit.

In Canada, starting in Jan/09, everyone will be able to open a TFSA (tax-free savings account) which means that you can deposit upto $5000/yr without paying tax on the interest earned. This can save you some money from being paid out in taxes each year also.

2. Cut back on unnecessary expenses:

I know we all think that we need the fastest internet with the home phone line with all options and the unlimited text message package from our cell phone provider. But do you really? Do you know what you are paying for?

My mom was paying $7/mth for the last 3 years to her Bell Canada home phone line for an answering service when we already had an external answering machine set up for her. Some might think that $7/mth is nothing, but for 12mths over 3 years it is a total of $252 before taxes! I’m sure you would prefer that in your bank account.

It only takes a few moments to look over your services and this can pay off by lowering your expenses and allowing you to save more for the long run.

Another thing that I eliminated was text message option. It is $8/mth with my cell phone provider, but since I have a Blackberry with data services, this text option was a useless waste especially when I only send 2 or 3/mth (cost 10 cents each when without the text message plan). I dropped this service and now one smaller bill to worry about.

The same can be said for my Cable TV where I have over 300 channels but have time to only watch a few TV shows each week, cutting offer 1/3 of those channels I lowered my TV bill by 50% and I still get the shows I love.

3. Pay off higher interest loans faster than lower interest ones:

We all have debts at one point or another. To maximize your dollar, you should consider which loans have a larger interest rate and plan on paying off those at a faster rate than something with a lower rate. By doing this, you can attain financial freedom at a faster rate without actually spending more of your budget towards paying those loans off.

Three simple tips can get you started onto a better path. Personally I have used these steps for myself and some friends and we all have that “just in case” account ready for when the time comes.

In this uncertain economy, a temporary layoff can be hard on the body and with money problems, health suffers also. Think about not having to deal with this crisis by creating an emergency funding account. You will sleep better and live longer knowing you have your umbrealla.

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