Last year, Canadians learned anything can happen and that the unexpected can quickly transform a safe, secure life into a precarious existence. As the New Year begins, let's convert this lesson learned into a strategy that will help property owners and would-be buyers alike.

Canadians who prepare for the unexpected will have a better chance of preserving their standard of living in the face of adversity. Those who are ready for the worst are also prepared to react quickly if great opportunity suddenly comes their way.

What would happen if your income dried up for a few months? Would you be able to survive financially if an accident kept you from working for a while? What if you were faced with a major repair or expense, would you have the resources to solve the problem?

Although home and disability insurance offer solutions to some problems, these policies have deductable restrictions, non-payment criteria and dollar limitations that often make them less useful than the insurance salesperson made them sound when you signed up. Outside help is limited, too, since Canada's social service network has been effectively dismantled and there are fewer community resources available to those in need.

Short-term financial flexibility is vital to success in today's rapidly changing world. A disaster or a windfall may be around the next corner. If you don't have enough cash on-hand to react quickly, you may be forced to disrupt long-term investments, take on more debt or strain relationships by turning to family and friends for help.

Anticipation is at the heart of successful property ownership and effective financial planning, however, most financial strategies concentrate on "wealth-accumulation" -- long-term saving and investment goals. In the process, emergency spending needs may be underestimated or overlooked.

The amount of accessible money and the need for an Emergency Fund differ with individual requirements, family responsibilities, income, property holdings, insurance benefits and financial strategies. Your fund may cover one month's expenses or as many as you feel necessary, depending on your income stability and lifestyle. But don't put aside too much. This money is not invested for the best return, just for accessibility.

An Emergency Fund consists of a specific amount of cash and liquid assets such as money-market funds, Treasury bills or T-bills, Canada Savings Bonds or cashable guaranteed income certificates. Lines of credit and overdrafts may cushion the need for immediate cash.

To help you calculate the amount of accessible funds you need, here are a few scenarios to consider when designing your Emergency Fund:

• If you had to replace the furnace or the roof this year, could you? Every part of your house will wear out eventually; some parts very suddenly. If your home is more than 20 years old, get ready for increasing repair costs.

• If you own an older condominium unit, you may be personally assessed thousands of dollars to pay for repairs, like a new roof, if the condominium's Reserve Fund can't cover all the cost.

• If your adult children or grandchildren are poor planners or are going through tough times, your Emergency Fund will allow you to help out without disrupting your finances.

• Tenants are not immune from property emergencies: Landlords can raise rents to cover major expenditures or negotiate leases that make tenants responsible for repairs. Should the landlord convert the apartment building to a condominium or retirement housing, you could be asked to buy your unit or pay for monthly services.

• Tenants are not immune from property emergencies, part two: If you are a landlord you must be prepared for vacancies, tenants who cannot or will not pay, and the need to make repairs.

• If the majority of your retirement income comes from sources vulnerable to interest rate shifts, such as interest on capital, your Fund may help you weather low-interest periods.

• Medical expenses not covered by government and private medical plans may also be included in the Fund, particularly those related to current medical problems or to potential hereditary conditions. Check out costs for home care and housekeeping support.

• An emergency fund may also allow you to take advantage of special sales, new educational programs, last-minute holiday invitations or other pleasant emergencies, but don't confuse this fund with "mad money." Consider any withdrawal a debt and repay your Fund as quickly as possible.

The closest we can get to security in 2002 may be knowing we have the financial flexibility to weather any storm.

For more articles by P.J. Wade, please press here.