🆘 How To Build A $1,000 Emergency Fund Using Precious Metals
David LeBlanc- May 10
- 7 min read
Updated: 23 hours ago
Hi real money tribe,
How are you feeling these days? Maybe a little stressed every time you buy groceries only to see how little you bring home for more $? Perhaps your frustration level is going up with higher taxes and fees on everything it seems? For me, all of this plus hearing that the Canadian federal government has plans for record spending of tax dollars that it doesn't even have means it has to print the money (from thin air) and/or borrow it making groceries and taxes even higher (and our dollars worth even less) - imagine if we operated our personal or family budgets in the same way?? You work for the same pay/wage, but all of this is reducing your hard-earned income and purchasing power. It's so hard to just stay afloat isn't it?
Often, a key first step towards addressing this while building more financial independence, choice and fulfillment is being prepared for those unplanned financial pitfalls and "emergencies". These can often can set us back financially and make it hard from which to recover such as replacing a blown car alternator, a sudden out-of-pocket medical expense, hiring a plumber to fix a leaky toilet. These legitimate small emergencies need to be paid, and not by credit card, and are not frivolous expenses. .
According to multiple surveys, including data from the Federal Reserve and Bankrate, nearly 60% of Americans do not have enough savings to cover an unexpected $1,000 expense, such as a car repair, emergency travel, or medical bill. In Canada, the numbers are similarly concerning, with over 50% of Canadians saying they live paycheque-to-paycheck and don’t have $1,000 set aside for emergencies.
So, what can you do prep for the unavoidable especially at a time when so many are living paycheque-to-paycheque and with life getting more expensive? Having at least a $1,000 available quickly and easily certainly won't provide a safety net for the bigger emergencies such as replacing a transmission or losing your job but will help you navigate the little ones which often seem to occur more often and can be financial killers. Also, having at least $1,000 set aside can help instil and reinforce sound financial practices and discipline while providing some emotional calm during rough financial seas.
"We want to avoid the little things (seemingly endless) from knocking us off our financial goals."
Now, if you already have a large investment portfolio or access other liquid assets, then having a separate emergency fund isn't all that necessary as you could always sell off enough assets to cover your expense(s).
Getting started with an emergency fund could be as easy as putting cash in an envelope at home (but even that could be easily spent at a moments notice of other things), in a bank account (but I'm not a fan of banks) as returns are lower than inflation (so your purchasing power declines) then there's taxes (if outside of a registered account) and on and on. Another option could be to have an emergency fund using physical gold and silver.
Silver and gold have been real money for thousands of years and are tangible assets that can be bought and sold. Unlike fiat dollars, which are designed to lose their value over time (i.e. annual inflation rate), gold and silver have a proven track record of holding their value. Plus, as you can hold it you own it thus there's no fear of losing it (unless you actually lose it!) which can't always be said for digital "assets".
Don't be like Fred and Wilma...does this sound familar?
I had one client, let's call them Fred and Wilma, who've been married for years and, though they both had decent jobs and income, they tended to spend what they earned - savers they were not. Within one particular year they had to fix the garage door, buy four new tires, and Wilma had unexpected travel expenses due to a medical procedure out-of-town. Things always happen in three's, right? Each of these unplanned and sudden expenses, while not a huge amount of money individually, were paid on their credit card which already had a sizeable balance from their winter vacation in the Bahamas and a recent 10th anniversary celebration with friends at a fancy restaurant that everyone's beem talking about. They were realizing that, while they had a comfortable income, they didn't have a way - or a plan - to pay for unexpected expenses without having to use their credit card which the balance was growing quickly - at 20% interest. After I had just one conversation with Fred and Wilma, they decided that it was time to build an "emergency fund" so they could pay cash (and not add to their card), while reducing stress and adding peace of mind.
But wait, there's more. While our conversation was wrapping up, Fred had the idea of selling his old watch which he knew would fetch close to $1,000 as he had seen the same ones selling recently on eBay. His idea was to out the proceeds into a high-interest savings account (paying 4%) which would be their new "emergency fund" with generous interest so it grows. Smart, right? Not exactly. See, inflation was around 8% (likely higher), so they were already losing by 4% each year. Worse even, as this high-interest account was not in a registered account, such as TFSA, any earned interest was taxed at 50%. The longer you hold your savings in fiat dollars, the less value it retains over time due to inflation (and taxes).
How to create a $1,000 emergency fund with precious metals. How to spend it in an "emergency".
1. Determine how much to be allocated between gold and silver
You may wish a 50/50 split between the metals, or more in gold than silver as the gold price is less volatile. Remember, an emergency fund is intended to be savings as its purpose is a safety net if/when needed - you should expect that the full amount to be there if/when needed, not less. If you decided on 100% silver, at today's prices you would need to buy 22ozs; and, if 100% gold it could be a coupl e of 1/10oz gold coins or maybe a 1/4oz gold bar (slightly more than $1K). However as the price of silver is more volatile than gold, I myself would not put 100% in silver.
Me, I would consider something like a 80/20 ratio between gold and silver. This could mean a 5g gold bar (~ $800) and four 1/oz silver coins. You can adjust your split based on what's best for you.
2. Trade in your fiat currency for gold and/or silver.
Once you've decided on your allocation, visit your local coin shop or trusted online dealer to swap your $1,000 fiat dollars for metals. Make sure to store it in a safe place and not to discuss with anyone other than your spouse/partner so it stays safe and is there for when if/when you need.
Oh no! Your need to replace your tires? Time to tap into your emergency fund!
Well, life happens and that's why you were smart in establishing your emergency fund. If you need to swap your fund back into fiat dollars, simply visit your local coin dealer to trade in the appropriate amount of metals for cash. You may even find that you don't need to sell all of your metals if their price appreciated - as precious metals tend to do over time.
🚨 "Hang on David, I don't even have $1,000 to begin with to start an emergency fund!"
Great point as so many are in the same boat but don't worry. Though you may not have the cash lying around right now, or a fancy watch like Fred to sell, there are several ways to gather it - either quickly or over time - so you can have your own emergency safety net. It can be as simple as making your own coffee instead of regular visits to Starbucks.
Reduce wasteful spending - think about how much you're spending on coffee or take-out each week. I used to go to Starbucks each work day and spend $5 ($25/week), and buy my lunch ($15/day) = $400 per month! - so reducing or eliminating these can be super easy and bring immediate cash savings - your emergency fund is on its way!
Spring-clean and de-clutter items around your home that you no longer want/need and sell them - a great way to re-purpose and add some cash!
Put off that planned discretionary expense (maybe that weekend getaway, spa day, or shopping spree) and re-purpose for your emergency fund. By now, you almost have $1,000 in cash!
Why not start that side-hustle you've always dreamed of? Most people have a certain skill which can be monetized (whether designing websites, knitting cat mittens, woodworking, whatever!) which can provide some cash for your emergency fund but also a new source of income while providing fun and satisfaction. Also with it, you are reducing your income risk should something happen to the other(s).
When you start to think about, there are many ways to easily and quickly ave $1,000 which can result in building better financial behaviours and habits.
Having a $1,000 emergency fund using precious metals can be a great and simple way to protect yourself from unplanned "little" financial emergencies and expenses. You'll have peace of mind knowing that you have a tangible asset that will be there and which could always be swapped for fiat currency if needed. Now, isn't this better than using your credit card and creating stress, worry and reducing cash flow? Oh I almost forgot, remember to re-build your emergency fund so it's always topped UP and to keep your anxiety DOWN when another unplanned expense occurs. Now, how smart is that? Feels good, right?
To your financial health 🥂,
David LeBlanc Precious Metals Coach
"Real money for We The People"
🌟 MAKE SURE TO DOWNLOAD MY NEW GUIDE TO LEARN MORE ABOUT HOW OWNING PHYSICAL PRECIOUS METALS CAN BUILD MORE FINANCIAL SECURITY, PROTECTION FROM INFLATION AND PEACE OF MIND.
✨ Questions or comments? Share below!
Comments