Emergency Fund Calculator

Why Emergency Funds Matter

An emergency fund is money set aside specifically for unexpected expenses or financial emergencies. It acts as a financial safety net so you do not need to rely on credit cards, lines of credit, or high-interest loans when the unexpected happens. According to the Financial Consumer Agency of Canada, having an emergency fund is one of the most important steps in building financial resilience.

How Much Should You Save? 3 vs 6 vs 9 vs 12 Months

• 3 months: A minimum baseline. Suitable if you have a stable dual-income household, strong job security, and minimal debt. Covers short-term disruptions like a car repair or minor medical expense.
• 6 months: The most commonly recommended target. Provides a solid buffer for job loss, extended illness, or major home repairs. Recommended for most single-income households and salaried employees.
• 9 months: Ideal for self-employed individuals, freelancers, or those in industries with seasonal or unpredictable income. Also recommended if you have dependents.
• 12 months: Provides maximum security. Recommended for sole breadwinners, people in volatile industries, or those with chronic health conditions. Gives time to make thoughtful decisions without financial panic.

Where to Keep Your Emergency Fund

Your emergency fund should be easily accessible but separate from your daily spending account. The best options in Canada include:

• High-Interest Savings Account (HISA): Earns more interest than a regular savings account while keeping your money liquid. Many Canadian banks and online banks offer competitive HISA rates.
• Tax-Free Savings Account (TFSA): If you have TFSA contribution room, keeping your emergency fund here means any interest earned is completely tax-free. Withdrawals are penalty-free and the contribution room is restored the following year.
• Separate savings account: Even a basic savings account at a different bank than your chequing account can work. The key is that it is not too easy to dip into for everyday spending.

Employment Insurance (EI) as a Partial Backup

In Canada, if you lose your job through no fault of your own, you may qualify for Employment Insurance (EI) benefits. EI typically replaces 55% of your average insurable weekly earnings, up to a maximum. While EI provides temporary income, it does not cover all your expenses and takes time to process. Your emergency fund bridges the gap between EI benefits and your actual cost of living.

Common Emergencies Canadians Face

• Job loss or reduced work hours
• Major car or home repairs
• Medical or dental emergencies not covered by provincial health insurance
• Family emergencies requiring travel
• Unexpected tax bills
• Pet emergencies or veterinary costs
• Natural disasters (flooding, ice storms)