Before you dive into the world of stocks, crypto, or real estate, one step is essential: building an emergency fund. In 2025, with market fluctuations and global uncertainties, having a safety net is more important than ever.
What is an emergency fund?
It’s a stash of money set aside specifically for unexpected expenses—medical bills, job loss, urgent repairs, or unplanned travel. It protects you from having to sell your investments at a loss during a crisis.
How much should you save?
Most experts recommend 3 to 6 months’ worth of living expenses. If your job is unstable or income varies (like freelancers or gig workers), consider saving more.
Where to keep it:
- High-yield savings account
- Money market fund
- Short-term GICs (in Canada)
Avoid locking it in long-term investments or volatile assets like stocks.
How to build it fast:
- Set up automatic transfers (e.g., $50/week)
- Cut non-essential expenses temporarily
- Use bonuses, refunds, or side gigs to boost the fund
Why it matters:
Without an emergency fund, a financial shock can derail your entire investment strategy. You may be forced to sell assets at the wrong time or take on high-interest debt.
Building an emergency fund may feel slow, but it creates a solid foundation. Once it’s in place, you can invest with confidence—knowing you’re protected from life’s unexpected curveballs.
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