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How to start an emergency fund

Personal Banking Updated Mar 28, 2018

Life happens.

Your washing machine breaks. You have a leaky roof. You lose your job.

No matter how well you plan, you simply can’t predict if and when unexpected expenses are going to arise – and inevitably they will.

When an emergency happens, your paycheck may only go so far toward covering costs, and you’ll want to avoid going into debt or dipping into your retirement or long-term savings funds.

Fortunately, it’s never too late to start saving, and it can be easier than you think! Here are three practical ways to help you start saving for emergencies.


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  • Open a separate account for emergencies.

    First, what is an emergency fund? It's a stash of money you put aside to cover you when unexpected expenses pop up. The goal is to consistently put money into your fund and avoid taking money out unless it's a true emergency.

    It can be a smart move to start a separate account for your emergency cash. Consider a savings account or money market account. These accounts give you easy access in case of an emergency, and both offer interest. By making small adjustments to your spending (e.g. bringing lunch instead of eating out), you could contribute at least $10 or $15 a week into your account.

    Give your BMO Harris account a nickname in BMO Harris Online Banking® to remind yourself why you're saving. Call it the "rainy day fund" or "crisis cash" or just a straightforward, "emergency fund." This could help take away the temptation to dip into it before you really need it.


  • "The goal is to consistently put money into your fund and avoid taking money out unless it's a true emergency."


  • Save what you need.

    Okay, so how much should you plan to save in your emergency fund? In general, you’ll want to shoot for the equivalent of three to nine months of your regular take-home pay.

    Your lifestyle and living situation will impact how much you'll want to put away:

    • Single and renting? You might want to aim for three months’ worth of paychecks.
    • Married with kids and a mortgage? You’ll probably want to save enough for six months.
    • Self-employed or freelancing? Your goal should be closer to nine months.

    You might also like: How much do you really need to retire?


  • "You'll want to shoot for the equivalent of three to nine months of your regular take-home pay."


  • Make it a habit.

    This is probably the most important tip. Practice setting money aside money and dialing back your spending, so you can watch your emergency fund grow.

    One way to make it easier on yourself is to set up automatic transfers into your savings account. With Auto Save, we’ll automatically transfer a set amount from your BMO Harris checking account to your BMO Harris savings account. Say you want to save $40 a month. Set up the Auto Save feature on your checking account and whoosh, $40 will move to your savings account every month! All you have to do is sit back and watch your emergency savings grow.

    You might also like: How to stop spending and start saving

    If you're feeling a bit overwhelmed, just remember that the most important step is just to start an emergency fund. Don’t get too hung up on the exact figure to put aside. No matter how small your contributions, just keep it up so you can be more prepared to handle whatever life throws your way.

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