Setting up an Emergency Fund

In life there is never a reason you should not be prepared; with that said after enduring the last recession we may have all seen how important it is to have an emergency fund.

An emergency fund is a savings you designate for a rough times; the purpose of an emergency fund is to provide a safety net during the times you are in need of money.

With that said, you have to ensure your emergency is a sage place, ideally in a savings account with a good rate, however that does not always seem to happen. Be sure to have your emergency fund in an accessible location, allowing you to withdraw money when you need it.

Whatever savings account you put your money in, be sure you know the rules for withdrawal limits; generally speaking many accounts have a limited number of withdrawals you can go before you get charged for excess withdrawals.

When it comes to accessibility, you have to consider how to actually get your money. With a savings account, you should be able to use a debit card to withdraw money when you need it, or you can do what I do and just set a quick transfer to your chequing account.

An emergency fund is meant to provide you with the peace of mind knowing you are financially secure in the face of hardships.

There is never an exact number as to what your emergency fund should hold, it all depends on the person and what you feel will be able to assist you during the time you need it.

When creating your emergency fund, you just have to be sure you are satisfied with the amount, the accessibility to it and you will be fine.