Don’t touch your nest egg
In a pinch, cashing in your RRSP may seem logical (it is your money), but doing so may do more harm than good. For starters, you will lose the benefit of compounding — the ability of your principal and interest to grow exponentially. Also, when you pay the RRSP back, you replace pre-tax money with after-tax money — a losing proposition.
Setting up an emergency fund is among the simplest and most important ways you can financially protect yourself and your family. Should the day come when the pipes burst and your basement is flooded, or you get sick or laid off, an emergency fund could be your saving grace. So plan wisely. In a time of need, you’ll be glad you did.