Why you need an emergency fund

It all started in July when our the washing machine died and needed to be replaced - followed soon after by our dishwasher. Then out of the blue I had to have an emergency root canal that my dental plan wouldn’t cover. And now the fridge is starting to act up. Add it all up, and this series of disasters ended up costing us a lot of money - money we had not planned to spend.

But there was a bright spot - we had an emergency fund that covered everything. Over the year we saved enough money to cover six months of basic expenses if one of us lost our job. We put it in a Tax-Free Savings Account (TFSA) to get it out of our reach and make it harder to access (i.e., we can’t get at it with our bank card). So when we needed the money it was there.

I’ve always thought an emergency fund was a really good idea - but having had a lot of unexpected expenses at once, I realize that, without extra cash on hand, we could have found ourselves struggling with debt very quickly.

Now we are working on rebuilding our emergency fund - and hoping that nothing else goes wrong!