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How to start building an emergency fund.

Ever think about what you might do if you experience a loss of income? Or how you might handle sudden and costly repairs to your home or car?

Life has a way of getting in the way of even the best laid plans. That’s why, when you have a little extra cash, an emergency fund could be the way to go.

An emergency fund, or “in case of emergency” fund, is money you set aside for unexpected situations. It helps create a safety net for times of uncertainty, hopefully buying you time until you reach some stability.

If you don’t already have an emergency fund, you’re not alone. A survey conducted by Capital One Canada* found that 56% of Canadian respondents with an annual income of $60,000 or less don’t have an emergency fund. Even 33% of Canadian respondents with an annual income of $100,000 or more say they don’t have extra money saved in case of emergencies.

It’s no wonder then that most Canadian respondents, 54%, say they’ve experienced an unexpected cold-weather expense over the past five years. Most Canadian respondents without an emergency fund, 68%, say they’d be anxious about a cold-weather related expense such as fixing the heat or replacing a winter tire or two (or four!). Not to mention all the regular home and auto repair emergencies that can pop up without warning throughout the year.

Saving for a rainy day.

Although saving may not be top of mind when a trip to the grocery store costs almost as much as a weekend getaway, it’s always important to think about an emergency fund. But it shouldn’t cause additional strain on your finances. We recommend reviewing your expenses and seeing if you have some wiggle room to stash your money away for a little while.

There’s no specific amount required for an emergency fund, but it’s wise to aim for about three to six months worth of basic expenses like bills, groceries and debt repayment.

Figure out the amount, then break it down.

You don’t have to save a large sum right away. Start with a smaller amount, say $540, and spread it out over an extended period of time:

A schedule like the one above can serve as somewhat of a stress test for your budget. If you’re able to comfortably meet your savings goal at the end of the three-month period, repeat it – $540 every three months adds up to $2,160 in a year.


  • Keep your money in a high-interest savings account. Watch your money grow as you earn interest on your savings.

  • Save the extra. Got spare change from tips? Put it in your emergency fund. Paying for a purchase in cash? Put the difference in your emergency fund, too. The key here is finding ways to set extra money aside without impacting your life too much.

  • Save your tax refund. ​​​ If you don’t need the money right away, saving your tax refund could give your emergency fund a nice boost! And don’t underestimate the psychological impact of seeing a bigger balance – that alone can help give you the extra determination to pile on the savings.

  • Don’t touch it! Keep your eye on that growing number instead. See the last sentence of the tip above.

  • Move on to other goals. Once you’ve saved enough to cover your expenses, focus on other savings categories, like your retirement fund and saving for a new car. Your budget can help you work toward your savings goals at the same time.

  • Find the money. Easier said than done. We know. That’s why we’ve created a guide to help you build a budget for your living expenses. Once you have a clear picture of your finances, you may find a few dollars to set aside for the what-ifs.

We don’t know what tomorrow will bring, but an emergency fund can hopefully bring a little certainty about the future by giving you some control over your finances.

If you’re not sure you have room in your budget to build an emergency fund, an experienced professional can help. Start by reaching out to your financial institution – they may be able to put you in touch with an advisor who can review your options.

* Capital One Canada commissioned an online omnibus survey through Leger. Leger fielded an online survey of 1,500 adults across Canada in September 2023.