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Life is unpredictable. At some point, you may find yourself in a situation where you need to pay for an unexpected purchase.
While you can't plan for every possible scenario, you can take steps to prepare. Whether it's paying for a car repair or replacing your dishwasher, it's important to budget for unexpected expenses. Having a solid financial plan, complete with contingency plans, can provide you with peace of mind and the flexibility in your budget to cover an unplanned financial cost.
An unexpected expense is an expense that comes as a total surprise. You didn't see it coming and couldn't predict that it was going to happen. Examples can include things like health emergencies, emergency home repairs and parking tickets.
Unlike an unexpected expense, an irregular expense shouldn't come as a huge surprise. An irregular expense may not happen on a regular basis like your rent or mortgage payment, but it is more predictable than an unexpected expense. Examples of irregular expenses include property taxes (if not paid monthly), insurance premiums and replacing your laptop.
Creating a monthly budget can help you to prepare for unexpected and irregular expenses and work towards your financial goals. Rather than trying to pull together money at the last minute, budgeting can help you be more proactive and able to adapt when expenses come up. Even if you have a good handle on your money, a budget can help you to focus your money so you can achieve your financial goals faster.
To create a budget, make a list of all of your sources of income. This can include income from your job, rental properties, or child support. Next, record all of your expenses. Consider different categories including:
- Regular expenses (mortgage, rent, utility bills)
- Unexpected expenses (home repairs)
- Irregular expenses (replacement laptop, attending friends wedding)
Now, subtract your expenses from your income. A positive number means you bring in more money than you spend. A negative number means you are spending more than you make and need to make some cuts.
If you are an eligible Scotiabank customer, you can make personalized budgets by using Scotia Smart Money by Advice+.* This tool, which lives in your Scotia mobile app under the Advice+ tab, lets you set up how much you want to spend each month on different categories, like groceries and entertainment. With your budgets, you will find out if you are underspent or overspent in each category. If you are underspent anywhere, that could be a great opportunity to start saving that money in places like an emergency fund.
Watch video - What's in a budget?
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with an optional subtitleScotia Smart Money can also help you keep on track with personalized insights and real-time recommendations that are based on your spending habits.
What kind of insights will you be getting? You find out things like if you’re reaching your credit limit, when your paycheque is deposited into your account and budget recommendations based on your spending history.
To save more and spend less, consider cutting things like take-out, subscription services, entertainment, and other non-essentials. Once you free up some cash, it's time to start setting financial goals and setting aside money for unexpected and irregular expenses.
When creating your budget, be sure to set aside money for your emergency fund. An emergency fund is one way to budget for unexpected expenses. But just how much should you budget for unexpected expenses? Experts recommend that you have three to six months' worth of living expenses saved up in case you encounter a significant unexpected expense or if you can't work.
Living expenses include things like your rent or mortgage payment, utilities, insurance, and food. Your emergency fund is not meant to cover non-essential expenses such as new clothes or a haircut.
To start building up your family's emergency fund begin by establishing your financial goals. How much do you want to save per month or how much can you realistically save per month? Use helpful tools like our Money Finder tool to work this into your budget. Even if you can only put away $20 per month, it's important to start building the habit of saving. It's okay to start small. The bottom line is having something in your emergency fund is better than nothing.
For those looking to save time and effort when it comes to money management, consider automating your finances. To get started, set up direct deposit with your bank. Now you are in a position to automate everything from your bill payments to your savings, and investments.
Automation can make it even easier to maintain a budget and reach your financial goals, making it simpler to do your daily money management. Consider setting up preauthorized contributions to your investments. Simply determine your financial objectives (e.g. investing 10% of your paycheque or saving $250 per month in your emergency account), set your automated payments, and then it's hands off. All you have to do is monitor your monthly statements to ensure your money is going to where it's supposed to and you are building towards your goals at a rate you are happy with.
Even if you've already started to grow your emergency fund or put money into a targeted savings account, it can still be a challenge to pay for an extra expense. Whether it's an unexpected medical expense, car maintenance, or replacing an appliance at home, you may find yourself in a situation where you haven't set aside enough money to cover the entire expense.
There is a cost-effective method you can consider using to help ease the financial burden and take control of your personal finances: an installment plan.
An installment plan feature on your credit card is among the ways you could consider to pay for unexpected expenses. Rather than trying to put together a lump sum amount to pay for an unexpected or irregular expense, an installment plan is a flexible option to split up a payment on your credit card over a period of three, six, or 12-months.
Installment plans works differently than the way you usually pay for balances on your credit card. The amount you have put on an installment plan on your credit card (whatever your purchase amount is) is then broken up into installments (fixed payments each month) that you will pay over a specific time period.
Scotiabank now offers Scotia SelectPayTM which allows you to convert eligible credit card purchases of $100 or more into a fixed monthly installment plan with low interest and no fee.1
You can set up the installments on your existing Scotiabank credit card and convert your purchase into an installment payment program right after you make it.
You want to build a budget that works for your financial goals throughout the year, beyond just when the unexpected happens.
You also may want to think about how are you managing your cashflow for daily expenses, like groceries or school expenses, or to help you build towards savings goals like a new bike, vacation or getting those amazing sneakers that just came out?
An installment plan can be a great tool to help you plan out those expenses and schedule how you are going to pay them off on time.
With the fixed installment payments, you will know what exactly your monthly payments will be and how much you need to set aside to make your deadlines. Let’s dive into how you can best use your installment plan throughout the year.
To take full advantage of the benefits offered by Scotia SelectPayTM, keep these three tips in mind:
Stick to your budget – Once you've created a budget, it's important that you stick to it. Installment plans help you know exactly what your monthly payments are for any purchases you’ve converted to a plan, so you can better incorporate them into your budget. Knowing what payments are coming up each month can help you better manage your finances and stick to your budget. Scotia Smart Money by Advice+ can help you with this by giving you a full view of your cashflow and monthly transactions. Remember that while an installment plan is a great way to prepare for large expenses and manage your cash flow, having too many installment plans at once can cut into your necessary expenses and undo your careful budgeting.
Track your monthly payments – This is easy to do using online banking or Scotia mobile app. All of your plans will be available to see all in one place.
Make your payments on time – Like your credit card payments generally, be sure to stay on top of your payment due dates and make your payments on time.
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®* American Express is a registered trademark of American Express. This credit card program is issued and administered by the Bank of Nova Scotia under license from American Express.
* Visa Int./ Licensed user.
™ Trademark of The Bank of Nova Scotia
† To be eligible, the purchase must be for at least $250 in Canadian dollars (including taxes), or such other amount as we may advise you of from time to time (the “Eligible Purchase”), only at Home Hardware, Home Building Centre, Home Hardware Building Centre, Home Furniture locations in Canada and online at homehardware.ca (the “Home Hardware locations”). See full list of eligible locations across Canada at scotiabank.com/participating stores. Home Hardware locations are subject to change. Applicable on After Purchase only. Other conditions apply.
‡ During checkout (in-store or online) is only available on eligible Scotiabank *Visa credit cards.
1 To be eligible, the purchase must be for at least $100 in Canadian dollars (including taxes), or such other amount as we may advise you of from time to time (the “Eligible Purchase”).
2 Scotia SelectPay is an installment plan feature (the “Plan”, “Installment Plan” or “SelectPay”) made available on eligible Scotiabank credit card accounts (the “Eligible Account(s)”) that allows primary cardholders to convert an eligible credit card purchase of at least $100 in Canadian dollars (including taxes) posted to the Eligible Account to an Installment Plan with monthly payments over a fixed payment period (the “Installment Payment Period”) with a fixed interest rate (the "Installment Rate") during the Installment Payment Period that applies to that Plan.
The total amount of your Installment Plan will be divided over the months you selected in your Installment Payment Period in monthly installment payments of equal amounts over a fixed period, except for the last installment payment, which may be higher or lower than the other installment payments, due to rounding.
No installment plan fee (the “Installment Plan Fee”) applies to these Installment Plans.
The Installment Rate and installment Payment Period may vary per Plan and will be disclosed to you at the time you select the Plan.
All Installment Rates and applicable Installment Fees and other applicable terms of Installment Plans are subject to change. Installment Plan offers cannot be combined with any other offer.
The Installment Rate that applies to your Plan will apply during the Installment Payment Period to the amount of your Eligible Purchase converted to a Plan on the date the Plan is processed (the conversion date) to your Account. Prior to that conversion date, the annual interest rate on Purchases that applies to your Account will apply to that Eligible Purchase from the transaction date.
If we do not receive payment of the full balance (the “New balance”) by the payment due date that appears on your statement in the month in which the Eligible Purchase was posted to your Eligible Account you will lose the benefit of your interest-free grace period on that Eligible Purchase and any applicable interest during that time will then apply at the annual interest rate that applies to Purchases on your Eligible Account from the transaction date until the conversion date.
You may lose the benefit of the Installment Rate and your Plan could be cancelled if we do not receive payment of your monthly minimum(s) payment applicable to your Plan (the “Current Installment Payment”) by your payment due date while your Plan is in effect (as set out in your full SelectPay Installment Plan terms and conditions - see below for which terms and conditions apply to your Eligible Account). If that occurs, any remaining outstanding balance owing on your Plan at the time of cancellation will be subject to the then current annual interest rate that applies to Purchases on your Eligible Account
In the case of Eligible Accounts that are subject to the SelectPay Terms and Conditions after January 29, 2024, if we do not receive payment of the entire amount of your Current Installment Payment by the payment due date shown on that statement, any unpaid portion of that Current Installment Payment will accrue interest at the annual interest rate that then applies to Purchases on your Eligible Account beginning from the first day of the statement period after the missed Current Installment Payment until that amount is paid in full. You will still owe us payment of any Current installment Payment(s) due after that missed payment.
Any unpaid remaining balance on your Installment Plan (the “Remaining Installment Amount Balance”) after the Plan ends or is cancelled by you or us will be applied to the outstanding balance on your Eligible Account. Your Remaining Installment Amount Balance is again eligible for an interest-free grace period. You will not pay interest on that Remaining Installment Amount Balance if we receive payment of the full balance (the “New balance”) that appears on your statement in the month in which your Remaining Installment Amount Balance was applied to the outstanding balance on your Eligible Account. If you lose your interest-free grace period on the Remaining Installment Amount Balance, any applicable interest will then apply at the annual interest rate that applies to Purchases on your Eligible Account on that amount from the date of expiration or cancellation of the Installment Plan until the amount is paid in full.
Your Eligibility to convert an Eligible Purchase to an Installment Plan and the terms made available to you are subject to Scotiabank’s assessment at the time you request to convert your Eligible Purchase to a Plan. SelectPay is only available through the Scotia mobile banking app and Scotia online to primary cardholders on an Eligible Account.
Eligible Purchases that we identify to you as eligible for a SelectPay Plan (After Purchase Plans) must be converted to a Plan through our Scotiabank Online or Scotiabank mobile banking within the time period as described in your SelectPay plan terms and conditions otherwise those Eligible Purchases may no longer be eligible for a Plan.
See the full Terms and Conditions for eligible Scotiabank Credit cards, eligible purchases and additional SelectPay terms and conditions, which are subject to change.
3 Other term durations may be available to you and if so, will be disclosed to you in our offer to you when you select
your plan.
4 These examples and calculations are approximate and for illustrative purposes only. Interest calculation and plan payment amounts are based on a 21-day grace period in the first month with the eligible purchase amount of $1,200 accruing interest at an installment plan interest rate of 5.99% versus 20.99% (as applicable) over a period of 3 months. The installment plan example does not include the interest that may apply between the transaction date of the purchase and the date your purchase is converted to a Scotia SelectPay plan. Actual plan payment amounts, interest charges and any interest savings will depend on various factors including the outstanding balance at the end of the installment plan period, and the amounts, timing and application of transactions and payments, and any applicable grace periods on your Eligible Account. Interest rate comparison effective as of date of publication and is subject to change.
