Emergency Fund

 As someone whose been unemployed since the end of July, I can speak from experience that an emergency fund comes in handy. Has there been moments of stress where I think the money will run out before I find employment? Of course but having something there as a buffer is so much better than the alternative. Having this buffer has allowed me to be selective in finding my next position and making sure that I’m looking for something that truly aligns with me, rather than jumping at the first available option.

An emergency fund is money set aside in case of unforeseen emergencies. It’s a fund that is there to support you and decrease the stress should you go through any life changing events, from job loss to medical issues and everything in between.

The fund should be a minimum of 3 months of your monthly living expenses. Like most things finance, it’s also your personal comfort level. If 4 or 6 months would decrease your stress level, have that set aside.

To start an emergency fund, calculate your monthly living expenses. This is a great starting point to determine what is needed for a 3 month grace period (or more if that makes you happy!).

Figure out what you can comfortably contribute each month or paycheque to this account. An emergency fund shouldn’t cause any additional stress to your current position.

Find a good option for this account. A savings account is usually the best bet over investing as you aren’t dealing with market volatility and you know the money you save will be there when you need it.

Personally, I chose to put my emergency fund in a high interest savings account (HISA). If you’re in Canada and looking for a good option, I recommend EQ Bank as their rate is 1.25%, over 10x what my traditional bank’s savings rate is.

Keep in mind, when you are comparing HISA, there are a few institutions that offer a high interest rate for a limited time, then the rate drops down to their normal interest rate. Remember to check out all the details!