Emergency Funds

Over time, we learn to expect the unexpected in life. You can't plan for the unexpected, but you can have an emergency fund to help you out when the unexpected happens. But let's qualify what constitutes an "emergency". If your vehicle breaks down and you can't get to work, even by carpooling or transit, that's an emergency. If your tv's getting old and you'd really like a new one? Not so much an emergency. Unless the Jets were to make the playoffs, then all bets are off. Whatever you decide to put away, knowing that you have it on hand can give you peace of mind. You won't have to scramble to come up with money you need and you don't have to turn to credit cards. Even if your emergency fund isn't big enough to handle everything, it can still help reduce the amount of money you must look for from other sources.

An emergency might include:

  • a health crisis; in Canada, much of our healthcare is covered by the government but you might need to pay for things that aren't, like dental work, expensive prescription drugs, or new eyeglasses
  • travel expenses; you may have to travel to care for a sick family member or to attend a funeral
  • unexpected loss of income; you might lose your job, or maybe have a temporary downturn in your income levels
  • major vehicle repairs
  • the failure of a major appliance; if your water heater bursts, you may need to pay for a replacement quickly, like really quickly
  • unexpected home repairs; if you have insurance it should cover accidental damage to your home, but not everything is covered, like basement flooding

How big should your emergency fund be?

It depends. If you have children or a significant debt, you may want to save more. If you have excellent insurance, you may be able to put away less. Every situation is unique, but three to six months of income is typically recommended.

Talking to an ACU financial advisor can help you decide how much money you need to keep in reserve.


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