How to build financial immunity

The coronavirus pandemic of 2020 has made budding epidemiologists of us all. Terms like ‘bending the curve’ and ‘herd immunity’ are common today. Having good immunity means resisting opportunistic assaults on our health – and immunity can also apply to other areas of our lives, like financial health.

How well could your finances cope with an unexpected emergency? It’s great to hope for the best, yet life has a way of throwing curveballs in the form of accident and injuries, job loss, lawsuits, separations and other challenging experiences, never mind a global health crisis. Sometimes, if the event is big enough, it can significantly derail our plans.

Recovery is much easier and faster when we’re prepared. So, how can we build our financial immunity?

On the Government of Canada public health site, you’ll find a plan for creating a home emergency kit. It contains things you would expect, like small bottles of water you can easily carry, flashlights, and a first-aid kit, as well as some less obvious things like an extra set of keys and a manual can opener. The site also recommends drafting an emergency action plan that everyone in the family can easily access which includes a safe meeting place, a pet care strategy, and a list of contacts among other things. By having a plan, you won’t waste precious time and money acquiring critical supplies or support when you need them most.

Creating financial immunity is no different. Here’s what should go into your financial immunity kit:

Emergency Fund

This fund has two components: One is physical cash or other store of value (e.g gold or silver coins) in the event you cannot access an ATM or funds in a money market account. You should have enough to cover basic expenses for a short period of time, such as a few weeks or, for anxious types, a few months.

Your fund should also include a savings account in a money market fund, high-interest savings account (HISA), or a cashable GIC. You won’t get much interest, but performance is not the point. This is what you will live on if no other source of income is available. Some financial planners recommend having a minimum of 3-6 months of basic expenses covered in this form, while others suggest having up to 3 years. Not everyone can sock that much money away, but for retirees or those with less secure employment, a bigger cash buffer is certainly better.


There are different kinds of insurance, but the main reason to have it is to avoid a catastrophic financial event. To choose the types of insurance that best fit your needs, ask yourself what would happen if you became disabled, lost your job, or totalled your car. Would you be able to financially withstand those events without adequate insurance protection?

Owning a universal or permanent life insurance policy provides a couple of unique benefits. In addition to providing lifelong protection and a death benefit to your beneficiaries, it also allows you to build up a cash value within the policy on a tax-deferred basis. This cash value can be a handy source of emergency income. You can take money out of a permanent life insurance policy in several ways: a direct withdrawal; an advance from the insurance company, which would reduce the death benefit payout; or use the collateral in the policy against a loan from another financial institution. Depending on one’s situation, using the cash value in a policy may be preferable to running up credit card bills or tapping home equity.

Action Plan

To create this plan, make two lists of expenses: essential and non-essential. Ensure you can cover the first and decide how to downgrade or eliminate the second.

  • Choose which bills will get paid and which get deferred.
  • Contact your service providers and financial institutions to renegotiate contracts, request fee discounts, or payment holidays. Confirm these requests do not negatively affect your credit rating.
  • Identify sources of financial aid such as CERB, EI, EI Sickness Benefits, and so on.
  • Identify ways to monetize some of your assets (e.g. online or yard sales) or your skills (e.g. offering child or pet sitting services, yard maintenance, seniors’ aide, part-time job). Anything you can do to stem the outflow of cash makes your money last longer until your situation improves.
  • Review or update your Will, and Powers-of-Attorney and ensure that anyone named as a Guardian knows where this document is stored.

Rita Silvan, CIM™️, is personal finance and investment writer and editor. She is the former editor-in-chief of ELLE Canada magazine and is an award-winning journalist and tv media personality. Rita is the editor-in-chief of Golden Girl Finance, an online magazine focusing on women’s financial success. When not writing about all things financial, Rita explores Toronto’s parks with her standard poodle.

Rita Silvan is a paid spokesperson of Sonnet Insurance.

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