So how much should you contribute to your emergency fund?

As daunting as it might seem, it’s recommended that you save 3-6 months of living expenses in your emergency fund¹. In the age of the internet, many financial institutions have calculators available to estimate the amount you should keep. In fact, Nerdwallet has a fantastic resource breaking down your monthly expenses to deliver a 6 month estimate of how much you should save.

If you’re at the beginning of your journey to creating an emergency fund, where should you start? Set monthly goals and stick to them if you can. Cut back on things that could be considered luxuries, and remember that one day you might be thankful your emergency fund exists².

Once you start to build your rainy day fund, it’s critical to remember what an emergency really is. It is not a vacation - as much as I wish it was - it is not a new wardrobe, or even a new television. It truly needs to be allocated to emergencies.

Resources

1. https://www.practicalmoneyskills.ca/calculators/calculate/emergencyFund.php?calccategory=budget

2. https://www.nerdwallet.com/blog/banking/life-build-emergency-fund/

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2017 Advisor Websites.