Emergency Fund After Loss: 8 Steps To Rebuild Your Financial Security When Your World Falls Apart

As someone who has suffered a loss without having money set aside for literally the rainiest of days, I’m hoping this post will help you be more prepared than I was.

In this post, you will learn what an emergency fund is, why it’s crucial to have this after you’ve experienced a loss, and my 8-step system to rebuild financial security when everything feels broken.

Losing a loved one has a dire impact on your day-to-day life, emotions, and of course it will wreak havoc on your emergency fund. 

RELATED READ: Emergency Fund After Loss: 8 Steps To Rebuild Your Financial Security When Your World Falls Apart

An Emergency Fund Is A Bridge

You should aim for 3-6 month of essential expenses for an emergency fund. 

Think of your emergency fund as like a bridge over troubled water – each dollar is a plank that keeps you from falling into choppy waters. The stronger the bridge, the more confidently you can cross from crisis back to stability. 

As finance author Ramit Sethi says, “Your emergency fund isn’t just money sitting in an account. It’s buying your future self time and options when everything else feels out of control.” 

I didn’t have much of an emergency fund when I was going through grief, and it did take me years to build up our families emergency fund. 

Whether it was needing to take time off to care for your loved one (sometimes years), a disruption to your career progression, sudden medical expenses, funeral costs, legal fees, or even disrupted income, grieving families, the people who need support, are often left scrambling and burning through credit cards to keep afloat. 

The Financial Shock Of Bereavement

The stats bear out the problem too – 64% of Canadians report never having an emergency fund sufficient to cover 3 months of expenses before the pandemic. 26% reported they wouldn’t be able to cope with an unexpected $500 bill. 

Bereavement brings along more expenses than ever predicted – one study found that average out-of-pocket grief related expenses in Canada totaled $12,500. More than half of these families relied on credit cards. 15% borrowed to cover costs.

Ongoing expenses like estate settlement, caregiving tasks and lost benefits can reach tens of thousands of dollars and persist for years. Vulnerable groups like widowed women under the age of 50 and single parents face the greatest financial hardship.

This Debt Is Called “The Grief Tax” 

This is the grief tax – the combination of emotional distress with financial strain. 

This makes recovering an emergency fund an essential part of recovering from grief. 

Why An Emergency Fund Matters Now

Using your emergency fund in times of loss is exactly the definition of it. Here’s the reasons why an emergency fund matters now: 

1. Bridges An interruption in Income: Bereavement usually means unpaid leave or reduced work house – an emergency buffer covers essentials without resorting to high interest (credit card) debt. 
2. Offsets One Time Costs: With average funeral costs and bills approaching $7000-$10000, without savings, families tap credit lines or deplete retirement accounts to pay for this. 
3. Supports Decision Making: In grief, money stress creates rushed or emotional decisions. A cash cushion buys time for clear, thoughtful planning. 
4. Preserves Long-Term Goals: Using your emergency fund in times of need can help you pause long term priorities – children’s education, retirement and focus on healing and getting back to work on your own timeline.

***If you’re needing a morning routine that will help prime you for the task ahead, click here to read this 10 minute routine.

Step 1: Find Out Your Debts and Needs 

• Calculate Immediate Needs:
  • Why? By knowing your numbers, you can see exactly where you are at. This step primes yourself for knowing how much emergency fund you will be able to target. 
  • How-To:
    • Identify Grief-Related Expenses – list funeral costs, legal or estate fees, unpaid bills and any outstanding debts that are owed. 
    •  Map Your Monthly Essentials – create a short list of your necessary expenses – rent, groceries, utilities and transportation. 
  • Personal Tip: Enlist help from family members or friends who can find these numbers with or for you. 

Step 2: Inventory All Cash Sources

• Why? By knowing how much you are able to bring in each month and from which income source, you can better plan. 
• How-To: Start with any grief-specific income gaps, making sure to account for unpaid bereavement leave, reduced hours, expected plan to return to work date.
  • Then, make a ledger of your current cash situation – chequing and savings accounts, bereavement leave, reduced work hours and salary going forward along with emergency ways to access money (like a line of credit or TFSA savings).

Personal Tip: Focus on immediate cash available today. 

Step 3: Allocate Cash To Your Emergency Fund

• Why? By having a plan for monthly income, you can also make a plan to start funneling towards the emergency fund each pay period. 
• How-To: Grab your fixed costs (mortgage, utilities, transportation) and your variable costs (groceries) an
• Now, identify non-essential costs you can pause (subscriptions, dining out) and allocate those funds to a separate account for emergency fund. Even a $20 Amazon Subscribe & Save cancellation can make a big difference in the long run. 
• Personal Tip: If this is in the positive, you will be able to add to your emergency fund right now. 

Step 4: Stabilize Cash Flow 

• Tap Available Benefits Strategically:
  • Why? Claim every benefit to maximise short term relief. 
  • How-To:
    • Look into survivor pension, which can be up to 60% of contributor’s retirement pension. 
    • See if life insurance or critical illness insurance provides a payout. 
    • The CPP/QPP death benefits  can provide one time $2500-$5000 payment to estate or designated beneficiary. 
    • Employer Benefits – Many offer bereavement grants or short-term disability to cover funeral leave. 
    • Apply for government sponsored assistance (provincial bereavement grants) where available so you don’t dip into your emergency fund prematurely. 

Personal Tip: Finding someone versed in these benefits is a key help. 

Step 5: Protect Your Fund By Managing Big BIlls: 

• Why? By negotiating big bills, you keep your emergency fund intact longer.
  • How-To: Pay funeral home deposit and probate fees first. Negotiate extended payment plans if needed. 
  • Use low interest credit carefully – pay minimums on non-urgent balances but avoid using high interest cards (>8%).
  • Negotiate mortgage and loan providers and ask for temporary payment deferrals or interest-only periods

Personal Tip: Most institutions have an ‘exceptional circumstance’ policy – use that term liberally here.

Step 6: Rebuild Your Emergency Fund in Phases

Stage A is the beginning and called the “Micro-Savings Kickstart”: 

• Automate $25-$50 into a high interest chequing or savings account or TFSA to come out every month. 
• Round up apps can deposit spare change from everyday purchases into your emergency fund.

Then, Stage B is Midterm Scaling

• Aim for $1,000 in liquid savings within a 3-6 month time frame – a proven buffer to cover most small shocks.
• Allocate any lump sums (tax refunds, bonuses, benefits) directly to this fund. 

Finally, head to Stage C, which is a Long-Term Goal

• Target 3-6 months of essential expenses – which at an average Canadian monthly budget of $4000 that means: $12k – $24k.

Personal Tip: Even you save only $25 a month, there’s a good feeling that comes from knowing you’re saving for future you. 

Step 7: Safeguard Your Savings

• Why? Ensuring wills and beneficiaries prevents court delays from locking access to your funds. 
• How-To:
  • Review and update your will, power of attorney and beneficiary designation. Only 24% of Canadian adults have an up-to-date will. 
  • Consider looking at term life insurance and critical illness coverage options to cover future emergencies without tapping savings. 

Personal Tip: I review my will yearly and us a Life Insurance Calculator to calculate my needs. 

Step 8: Monitor, Review and Adapt:

• Why? Monitoring helps make it real and consistency means you will continue to do it. 
• How-To:
  • Celebrate milestones each $100 added (I like making myself a really nice Americano) as another progress toward security. 
  • Track Your Healing and Your Savings every month with a calendar event called “Emergency Fund Celebration 

Personal Tip: If you’ve made it this far, I’m proud of you for taking steps to get back up on your feet with an emergency fund. 

This Post Was An 8 Step System About Building An Emergency Fund

Rebuilding After Loss is neither quick nor easy. But when you begin to look into potential funding available, taking an assessment of the situation and starting a slow and steady march towards an emergency fund, you will build not only a safety net, but a foundation upon which you can heal, plan and pursue purpose beyond grief. 

Download Your Free Emergency Fund Rebuild Checklist Here

Your free Emergency Fund Rebuild Checklist is here. It’s a printable, step-by-step guide with Canadian resources and space to track your progress