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.

Canadian Imperial Bank of Canada (CIBC) has introduced a great savings account for anyone to apply for.

This savings account I am talking about is the CIBC eAdvantage Savings Account, and it will allow you to maximize your savings by paying high interest when you balance is $5,000 or more.

The CIBC eAdvantage Savings Account is for you if you:

- Want to maximize your savings because you have larger savings goals

- Want to access and manage your funds online

- Want to save towards a major purchase

- Want to create an emergency fund

- Want to have easy access to your money anytime.

You are able to earn CIBCs best non-registered savings account rate when your balance is $5,000 or more, and interest is calculated on each day`s final balance and paid monthly to you.

You are able to transfer money to your other Canadian dollar CIBC personal bank account; of course this excludes Interac Email Money Transfers, because they are treated as transactions.

For your convenience, you have 24 hour access to your CIBC eAdvantage Savings Account, whether you go online, an ABM, telephone or Interac Direct Payment.

You receive a CIBC Convenience Card when you open a CIBC eAdvantage Savings Account which allows you to make everyday purchases.

You should be aware that for each transaction you make, I will cost $5.

To avoid this cost, transfer money into a Canadian dollar CIBC Personal Banking account, and spend money from there.

This is a great saving account for anyone who wants to earn a good deal of interest while having great access to their funds.

A while back I began a mini-series on the fact that the recession was ending, and what we could learn from it.

We learned multiple lessons throughout the recession, and you might have found yourself saying “What if” a lot. The “What if” would be in terms of “What if I saved more?” or “What if I spent less?”

All that is left to do is to start thinking on what you can do for the future.

Most of us have already learned that when we say we will build an emergency fund, we will actually deposit monthly and stick with it until the time comes that it is necessary.

I will not begin to restate what was said last time, although it would be good to reinforce those lessons.

I will only focus on one point I find to be the most important.

Creating a savings is important to anyone, it does not matter how much you are able to put away, once you are saving then you are reaching your goal.

When you create a savings, it can be used for when you reach a rough patch in your life.

For me, it took a while to actually start saving, like everyone, I would begin putting away money but then I would slowly stop as my spending began to increase.

That is why you should monitor your spending habits. If you are able to do this, you can cut back on excessive spending, and allow yourself to live within your means.

I do not mean to say as to go as far as to take out any luxuries in life, but you should take everything in moderation.

Investing can work, once you put in the time, and the money in it. Your best bet is to sit down with an advisor and discuss what you want to see with your investments, short term goals and long term goals.

When you find yourself in a bind, relying on credit is not laways the best decision you can make. In a recent study, it shows that Canadians will rely on credit in the face of a financial emergency, which is why an emergency fund or savings is necessary.

Always prepare yourself for the unexpected, you never know what the future will hold for you.

At some point in our life we will want to be able to sit down and realize that it I time to relax. When I saw relax, I mean that we have to actually be able to enjoy what life has to offer, after spending year of working to the point we are at.

By following the tips I have, you should be a able to reach retirement faster than you think.

1. Pay Off Credit Card Debt

If you carry a balance, you should pay it off before you even consider investing. You do not want to be left with paying off your debt with the money you are earning from your investments.

2. Set-up and Emergency Fund

Anyone can get laid off in today’s economy. For that reason, you should have a contingency plan. This plan should be in the form of an emergency fund that can last about 6 months. Keep it in a high interest savings account that gives you no penalties with you withdraw.

3. Start Investing

You should begin investing as soon, but this should be done after you have done the steps above. You investments do not need to be large, but you should start early.

4. Finding an Advisor

You might not be the type of person who is comfortable with managing your own investments. What you should do is find an advisor who will have your best interest, rather than trying to sell you investment products.

5. Asset Allocation is Key

You should not be placing all of your money in one place; have it spread around to make your portfolio diversified.

All that is really left is to wait for the day that you are going to retire. By following the steps above, you are paving a way for you to have an enjoyable retirement, however remember this is the beginning of what you should be doing.

More information on investing will come when the new website is brought out.

Do you want to feel free financially? Do you want to reduce stress on your life, feel more comfortable at the end of the month, or even start to sleep better? All you have to do is start an emergency fund.

What is an Emergency Fund?

An Emergency Fund is a savings account set aside for emergencies. Quite simply, it is a set amount of money that you will not touch unless you absolutely need to. Emergency, in this case, does not mean a sale at Winners, or a new CD that you absolutely must have. It is something more significant, like unexpected car maintenance, sudden unemployment, emergency dental work, etc. An emergency fund is money that you would otherwise have to borrow to deal with the inevitable unexpected expenses of life.

Why Do I Need an Emergency Fund?

Life, as we all know, is full of unexpected surprises. I entered into my last year of college with an old(er) PC that had been sitting around all summer. After we got moved in, I set up my computer, plugged it in, and turned it on. It worked for about 6 minutes, and then “poof”. Black screen, smell of burning, no more PC. Whether it was the power supply or the motherboard, I will never know, but I do know that I was suddenly facing 8 months of papers without the ability to type.

A few months later I was driving my then girlfriend now fiance to the Horseshoe Bay Ferry in my sister’s little Toyota. The engine decided to leave all of its oil somewhere in between the terminal and exit 4 on the No. 1 Hwy, and suddenly car repairs were a necessity.

Emergency funds allow us to not only pay for those expenses when they do come up, they allow us to relax beforehand, knowing that when they come, we will be okay. After I returned from a vacation in Hawaii, I was facing the rather immediate prospect of unemployment with a very small amount of money in the bank account. An emergency fund would have significantly reduced my stress over the six or seven weeks I went without work.

Isn’t that What Credit Cards Are For?

No. Credit cards are necessary evils, but should never be relied upon. For one, anything you put onto your credit card can be charged interest. So if your emergency is costing you $200 and you can’t pay it all back within the next 30 days, then you’ll be paying $220 for your emergency instead of $200. Twenty bucks not so bad? What if the emergency is $2000, and you have to pay $2400 after interest charges? What if you can’t pay it back at all?

In addition, credit card companies enjoy doing mean things to their customers. Like, cutting your credit limit – even below your balance, or canceling your card altogether while you’re traveling. What a lot of people forget is that your credit limit is something that is arbitraily decided by your credit card company, and can be changed whenever and however they see fit. Your credit limit does not have a guarantee on it. The bottom line is that you cannot rely on credit to be there when you need it.

How Much Money Do I Need For An Emergency Fund?

If you read personal finance blogs, you’ll read advice that ranges anywhere from $1000 to six or nine months worth of monthly expenses. Trent from The Simple Dollar wants an emergency fund that would cover 12 months of expenses. JD from Get Rich Slowly has an emergency fund of $5000, enough for three months of his mortgage payments, or two months of full expenses. The truth is that your emergency fund is a form of risk management, and its size is dependent on how much risk you are comfortable with. Apparently, for the majority of us, we are willing to take a huge amount of risk, because we don’t have an emergency fund. I, for one, am not terribly comfortable with that risk, and am therefore starting to save an Emergency Fund bit by bit.

You are the only person that can decide how big your emergency fund can be. Many factors will contribute, including the stability of your income/employment, your monthly expenses, if you have any dependents relying on you, etc. The point of the emergency fund is to reduce your stresses, so save up enough so that you feel comfortable. The article that I first linked to by MSN Money recommends that you save up at least $500. The study referenced suggested that $500 in the bank will improve your life, both financially and mentally. I agree.

How to Start an Emergency Fund

If you’ve already opened a high interest online savings account, and if you have been following the advice to start saving some money, then you are already set up. All you have to do is create a sub account labeled “Emergency Fund” and start up an Automatic Savings Plan (ASP) to regularly deposit a small amount of money into the account. It doesn’t need to be a lot, and it doesn’t need to be a full $500 right away. I’ve been allocating $25 per paycheck to my Emergency Fund, which is currently around $200. It is money that I won’t miss because it is gone before I even had the chance to count it, and it gives me an incredible sense of peace because I know that I have a few hundred dollars waiting for me, just in case.

So go ahead, set up your bank account to take a few bucks off each month. If you’re worried about your finances, start small, with ten or fifteen dollars. I promise that you won’t miss it.

Potential savings: $20+ per month. Total savings this month: $83