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Emergency Fund 101

January 28, 2022



Let us look back to January 2020, we all were filled with so much hope at the sight of a new year. “2020, the year of clarity”, remember that? Then Rona Girl came in with a VENGEANCE, fogged-up everybody’s 20/20 and had it looking more like a 30/40.

If 2020 has taught me one thing, it has taught me how unpredictable life can be. While you can’t plan for everything, it helps to be prepared in case of something. This is where an emergency fund comes in.

What is an Emergency Fund?

Emergency Fund, rainy day stash, get vex money, whatever you call it; is money you set aside for the financial curveballs that life may throw your way.

The Merriam-Webster dictionary defines an emergency as ‘an unforeseen combination of circumstances or the resulting state that calls for immediate action’. Are the new curve love jeans at Abercrombie an emergency according to this definition? No. “But Reni, I just learnt from TikTok that I can stack promo codes and get the jeans for 70 per cent off!” It’s still a no from me, chief.

An emergency fund is different from your savings. It is money that should be set aside to cover unplanned expenses, not impulsive expenses; Uber Eats = impulsive, car tires popped= unplanned, new frontal = impulsive, major home repair = unplanned.

Do I need an Emergency Fund?

Yes, yes, yes, a thousand times yes! We all need an emergency fund. I do not know a single person on this earth who is emergency or accident-proof (and if you do, have them contact me). Before you even think of investing, you need to create an emergency fund. 

I love investing and I have been doing it since I was 18 years old. Investing, however, does not guarantee immediate returns on your money. Since an emergency can arise at any time, I would not recommend that you hold your emergency fund in the form of an ETF, stocks, or mutual funds.

How much should I have in my Emergency Fund?

The amount that you should keep in your emergency fund has to be assessed on an individual basis. What arer your average monthly expenses? How much do you spend on essential items?

At the end of the day, the amount of money in your emergency fund should be what makes you feel comfortable. I would suggest, however that you keep at least 3 to 6 months’ worth of necessary expenses in your emergency fund.

How to save towards an Emergency Fund?

This may sound a little overwhelming especially if you’re someone with $0.13 in your savings account, an Uber Eats order on the way, lounging in your Lululemon align pants and you have an Aritzia cart full of clothes ready for checkout. I see you; I hear you, and I am here to help you.

  1. Add “Emergency Fund” as a category on your budget.
    You should be intentional about allocating a set amount of your monthly income towards your emergency fund (here is a blog post where I speak about meeting financial goals). Something that has always helped me is to set up an automated transfer from my chequing account to go towards the emergency fund. This automation will help you to not miss the money because it is gone before you even check your account.
  2. Deposit a lump sum of money into your account.
    Whenever you receive a substantial amount of money, deposit it and add it to your emergency fund. Do you have Christmas or birthday money lying around? Consider adding it to your emergency fund. Tax refund season is right around the corner! If you receive a refund, check out one item from your Aritzia cart (✨because treat yourself✨), buy yourself dinner, then add the rest to your emergency fund. 
    Saving for your emergency fund takes discipline and intentionality. I believe you can do it! I am rooting for you.

Where should I keep my Emergency Fund?

The great Robyn Fenty once said, “work, work, work, work, work, work” and I am all for making your money work for you. As I said before, I do not recommend that you keep your emergency funds in the form of stocks, mutual funds or ETFs and keeping your money in a regular chequing reaps little to no rewards. To make your money work for you (at least a little), I would recommend that you use a high-interest savings account or HISA for short.

Here is the math, If I put $10,000 in a regular savings account with 0.05 per cent, in one year it will be $10,005. If you put it in a HISA account with 1.25 per cent, you will have $10,125 at the end of year 1. It may not seem like much, but it adds up. I have a video where I compare high interest savings accounts in Canada, and you can watch it here.  

But which HISA is #ReniRated? Well, I am glad you asked. I would recommend either of these two, Neo Financial or EQ Bank.

Neo Financial has a 1.3 per cent interest rate and EQ Bank has a 1.25 per cent interest rate as of publishing this blog. Both banks offer the flexibility of a chequing account while giving the added benefit of an interest rate over 1.2 per cent.

Now, I know you love your mainstream bank but try something new abeg.  Both banks are members of the Canada Deposit Insurance Corporation (CDIC), so your money is just as safe as a mainstream bank, and even safer than under your mattress. 

If you want to sign up for either of these banks, click here for Neo Financial and here for EQ bank – using my links tells them I sent you.

If you would like to hear more about Emergency Funds, feel free to check out my video below.


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  1. Morenikeji says:

    Thank you for this! Really needed to hear this