So I have been reflecting on the costs of this disease. If I start reflecting the costs overall, it might be a little overwhelming, so I’m just going to keep it focused on the present. What I am aware is that I am eating away at my “lump” of savings quite well in the past months. I knew this would occur once I started to figure out the timing of my various income sources or the lack thereof. I think this is what financial advisors call your “emergency fund.” I can’t say I’ve ever formally had an emergency fund, but I know that I have always try and keep my general account that I use daily above a certain large amount so that if there are emergencies I can access it immediately. Now is one of those times that I will acknowledge I am going to let my account drop below said level because this is what the “emergency fund” is for. I have wondered what others do in these situations, as I am aware of friends (and others) who are living paycheque to paycheque. Thankfully I am a good little saver, for the most part.
What does this work out to be on practical terms? I will share some loose numbers to give you an idea. I hope this could be useful in understanding why financial advisors suggest having 3-6 months of salary as your emergency fund.
My last paycheque was February 15. I believe my first employment cheque/deposit was around March 20. It is great to have Employment Insurance for the sick/illness leave for 15 weeks as my workplace does not have short term disability, only long-term. However, there was a full month of expenses to cover without any income. My long-term disability claim has a waiting period of 120 days (loosely 16 weeks) from the last day I worked, so there will be some overlap between Employment Insurance and my Long Term Disability. Sounds not bad, right?
So, Employment Insurance (EI) is 55% of your gross income to a maximum amount that works out to be $1725/month, it`s not hard to be receiving the maximum amount of EI benefit. Add in the fact, I have to pay my company the full amount of my health benefits coverage and long term disability costs to maintain them, which is the lovely sum of just over $700 per month. It may be obvious, but not maintaining benefits is not an option. So, now I am now living on about $1000 plus whatever child tax benefits etc. per month until the long term disability kicks in (which is 2/3 of my usual paid work income) and long term disability pays out monthly at the end of the month. So even though I am being covered by LTD come June (assuming all is approved) and I could collect the EI payments into June, but then the government will want me to pay the EI overpayment (where EI and LTD overlap) back.
I’m sure if one applies the expenses of mortgage or rent, daycare (which I fortunately have subsidized and have worked very hard to have the subsidy amount reduced and my case being seen as special needs), food, gas, car maintenance and/or payments, utilities, etc. It becomes clear that three months income is easily the amount spent in these sorts of events despite having social supports. Apparently this is what to expect if one becomes unemployed too. All good reason to ensure one has that emergency fund. Now I’m starting to wonder how I can build this up again once LTD kicks in, because apparently I have a knack for finding myself in these sorts of crises.
