The content on this website may contain referral links, affiliate links or sponsored content. This means we may earn money from brands when readers click through, purchase, or sign up through certain links. This won’t cost you anything extra if you decide to purchase something.
What is an emergency fund?
Table of Contents
ToggleWell, it’s exactly what it sounds like, and unfortunately, most of us don’t have one. It is savings stocked away which can be accessed easily should an unexpected emergency occur, like loss of job for instance or major unexpected home repair. Should you encounter an urgent situation, your emergency fund will keep your expenses covered in the interim without forcing you to go into debt. Consider it as your own personal insurance.
How much do you need?
The amount of emergency fund recommended is anywhere from 3 – 6 months of your set expenses depending on who you ask. How do you decide how much you need in an Emergency fund?
Do some calculations to add up your monthly mortgage or rent, insurance, utilities, phone, gas/transportation, and food as the basic amount. Then multiply that by the number of months you have decided on – whatever gives you peace of mind to know you are covered. That will be your EF goal. If you are working on paying down debts at the moment, it is important to start setting a little bit aside each month to start building it up.
Where should you put your Emergency Fund?
These funds need to be somewhere that is easy to access at a moments notice. so don’t tie it up in investments. This money should be easily accessible to you in a matter of days at most – while still offering you some growth potential – so, not under your mattress or in a piggy bank. A High Interest Savings Account is a potential option, speak to your financial advisor to determine what is best for you. EQ Bank offers a great everyday rate in their High Interest Savings account, a great place to stash your EF!
For more blog posts like this, check our Savings and Debt Section of the blog!
More from the blog...
Is the 50 30 20…
This budgeting method, popularized by the book All Your Worth, divides your income into three categories: 50% for essentials, 30%...
Read MoreHotels.com Canada Plus 4 Of…
Learn how combining Hotels.com Canada with one of the 4 Best Travel Credit Cards can Supercharge your stay and make...
Read MoreFHSA Canada: Understanding the newest…
Understanding the FHSA, Canada’s newest tool for homeownership The FHSA in Canada is a new account for aspiring homeowners. Is it...
Read More3 Top Portfolio Visualizer Tools…
Investors have many tools to choose from when they want to learn about stocks, but what if you also wanted...
Read MoreThe Best No Fee Bank…
The Best No Fee Bank Accounts in Canada: Say Goodbye to Fees. When it comes to banking, nobody likes to...
Read MoreWhat is moomoo? The moomoo…
Moomoo Financial Canada is a trading platform where you can invest in the stock market. They started in 2018 in...
Read MoreWhat is a Defined Benefit…
What is a Defined Benefit Retirement Plan? Throughout your career search, you may come across some employers that offer a...
Read MoreShould You Open An RESP?…
Financial Priorities: 3 Reasons Parents Should Not Open An RESP And Invest For Their Kids Many millennial parents are struggling...
Read More5 Ways Beginner Bloggers Can…
5 Ways Beginner Bloggers Can Monetize Their Content for Profit Social media is awash with posts and reels claiming you...
Read MoreThe 5 Best Investing Platforms…
5 best investing platforms for beginners in Canada - Not sure where to start when it comes to investing? Let...
Read MoreAbout The Author
Jessica Morgan
Jessica Morgan is the founder and CEO of Canadianbudget.ca. She is passionate about personal finance and helping Canadians improve their financial literacy by providing more Canadian focused financial content. A millennial mom of one, she has a burning obsession with all things personal finance.
Jessica has a BA in East Asian Studies from York University and a Masters in Business Administration from Toronto Metropolitan University. She is a career public sector employee with a Hybrid Pension, and an advocate for Canadian women to improve their personal finance knowledge.