How Much Money In An Emergency Fund Is Enough For Canadians?
An emergency fund is important for you and your family when unexpected expenses happen. Unfortunately, according to a 2016 study, about half of Canadians live without one. While not particularly glamorous, everyone should have one to help out when life events from grave situation to inconveniences occur. A general rule of thumb is that an emergency fund includes enough money for up to six months of expenses. It is to be used if you ever lost your job or to cover costs such as medical expenses, or unplanned necessities like a car breaking down or a home appliance needing to be replaced.
- Close to half of Canadians do not have enough money in savings to deal with a minor or major life crisis.
- An emergency fund should consist of around 3 to 6 months of a person’s living expenses, and should be based on fixed costs like a mortgage and variable expenses like groceries and utilities.
- Putting money aside for an emergency fund doesn’t need to happen all at once, and can instead be built up gradually.
“Regardless of the severity, what all these scenarios have in common is you suddenly shelling out money you didn’t plan to spend. And that can be problematic for nearly half of Canadians.”
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