Building an Emergency Fund: Why It Matters and How Much To Save
Key takeaways
How much? Aim for 3–6 months of expenses (~$11,000–$22,000 for the average Canadian living alone).
Too steep? Start with $500, or whatever you can afford.
Where? Keep it in a HISA or TFSA — separate, but easy to access.
An emergency fund is a cache of savings that's used to cover costs during an emergency. Emergency funds are often kept separate from other savings accounts, and only used in times of necessity, such as:
Job loss.
Accident or illness.
Fire, flood or other natural disasters (especially when you don’t have insurance to cover those incidents).
Unexpected expenses, such as home repairs, car repairs or medical expenses.
How much should my emergency fund have in it?
Experts say you should have three to six months of living expenses saved as an emergency fund.
For the average Canadian living alone, that's roughly $11,000 to $22,000 — one-person households spent about $3,700 a month on goods and services in 2023, according to Statistics Canada's most recent Survey of Household Spending.
» Use our emergency fund calculator to find your target based on your current expenses.
Depending on your other debts and expenses, it can take a while to build that kind of nest egg, though.
If that sounds steep, start with a number that feels more doable. Having access to $500 in a savings account could cover a surprise car repair or medical bill without going into debt. Put $10 a week into savings and don't touch it, and you'll clear $500 within a year. It all makes a difference.
What do emergency funds look like for the average Canadian?
Thin, for most. Over half of Canadians (55%) say they can’t build an emergency fund while also saving for financial priorities at the same time, and 76% of that group blames the high cost of living, according to a survey by RBC.
In the same poll, 35% said they'd turn to a credit card to cover an emergency expense, and 32% don't have an emergency fund at all — a figure that rises to 38% for households earning under $100,000.
The same survey hints at why the fund is worth building anyway: the top reasons Canadians gave for keeping one were peace of mind (51%) and less stress (46%).
🤓 From the Nerds: In NerdWallet's 2026 doomspending study, half of Canadians said a recent stress- or mood-driven purchase cut into their savings. An emergency fund won't stop a bad day — but it can ease the money anxiety that drives "doomspending" in the first place.
How do I build my emergency fund faster?
Once you've decided on the amount you'd like to save each week or month, there are several ways to accelerate the process.
Eliminate unnecessary expenses. For example, prepare coffee and meals at home instead of grabbing takeout — these were the most common purchases in NerdWallet’s doomspending study.
Set up automated transfers. By moving a given sum from your chequing account into your emergency fund each week or month, you can be sure you won’t spend that money elsewhere.
Add lump sum payments. Whenever you get an influx of cash, such as a tax refund or workplace bonus, put at least a portion of it into your emergency fund.
Sell things you no longer need. Whether you have a yard sale or market items for sale online, you’ll earn some extra cash that you can deposit in your emergency fund.
Round it up. Some providers, like KOHO, have features that round up any purchase to the nearest dollar amount you choose, with the difference going directly into savings.
Where should I keep my emergency fund?
Keep your emergency fund separate from other savings so you aren't tempted to spend it. At the same time, the money needs to be readily accessible, as the nature of an emergency means you'd need to make withdrawals at a moment's notice.
As such, you should opt for a high-interest savings account (HISA) or a tax-free savings account (TFSA). This way, you'll earn some interest on your emergency fund while keeping your savings easily accessible, and with a TFSA, you'll also shelter those interest earnings from income tax, which means your emergency fund can grow even faster.
If you are looking for more growth, you can also put your emergency fund into an interest-bearing investment, like a cashable guaranteed investment certificate (GIC). Avoid non-redeemable GICs though — the money will be locked away for a full term and you won't be able to withdraw it without a significant penalty.
Avoid higher-risk investments, such as stocks, ETFs, bonds, or mutual funds, when it comes to emergency savings. That's because you could need this money at any time — too soon to ride out the stock market's swings the way you can when investing over a longer period.
Instead, your emergency fund should be accessible right away and your principal pot of money should always be intact. That's why low-risk, low-growth options are preferable to high-risk, high-reward investments when it comes to an emergency fund.
Sources
NerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines.
- Financial Consumer Agency of Canada. Setting up an emergency fund. Accessed Sep 25, 2026.
- Statistics Canada. Table 11-10-0224-01 Household spending by household type. Accessed Sep 25, 2026.
- RBC. RBC Emergency Readiness Poll of Canadians aged 18+. Accessed Sep 26, 2026.
Key takeaways
How much? Aim for 3–6 months of expenses (~$11,000–$22,000 for the average Canadian living alone).
Too steep? Start with $500, or whatever you can afford.
Where? Keep it in a HISA or TFSA — separate, but easy to access.
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