An emergency fund is simply a source of cash that's easily accessible whenever you need it, for example, in a Tax-Free Savings Account (TFSA) or high-interest savings account. According to a recent CIBC poll,¹ nearly half of Canadians (45%) don't have an emergency fund. Some Canadians may rely on credit to cover unforeseen expenses.
How big should your emergency fund be? Many experts recommend setting aside enough to pay all of your household's expenses for a minimum of three months, and preferably six months. Build your emergency fund with regular contributions into a separate account, and make sure the money is invested for liquidity so you can withdraw it at a moment's notice, without fees, penalties or tax implications.