From losing your job, to car/home repairs, to accidents, to illness and disability, an Emergency Fund is the best way to cover your butt in case of life’s problems.

How to start an Emergency Fund:

1. Decide how much you need. You should save 3-6 months of “Essential Expenses”. What are your “Essential Expenses”? Rent/Mortgage payment, Food, Car Payment, Minimum Debt Payment, etc Anything that you’d get into serious trouble if you didn’t pay. You may have cancel non-essential services (cell phone, cable, etc) until your back up on your feet.
2. Start Saving! Even $25 per pay check can go along way. Make the debit automatic from your bank account into a High Interest savings account. Don’t put into GICs or anything else where you won’t have good access to the money. But, don’t put the money somewhere where it’s too easy to access it, that will give you the temptation to spend it on non-emergencies.
3. Once you’ve reached your 3-6 month goal, you can stop the automatic payment if you like. But, when you’ve paid something out of the emergency savings, you should try and put that money back as soon as you are able.

Having an emergency account is an essential part of any Financial Plan. Start yours today!