Every financial advisor tells you to have 3–6 months of expenses saved. In Canada, with housing costs what they are, that number can be paralyzing. Let's make it practical.
What 3 months actually means in Canada
If your monthly expenses are $3,500 (common in Toronto/Vancouver), 3 months = $10,500. Six months = $21,000. For someone earning $55,000/year, that's a massive goal. Here's how to approach it in stages.
Stage 1: $1,000 starter fund (6–8 weeks)
This covers most unexpected expenses: car repair, emergency dental, appliance replacement. It stops you from going into debt for small emergencies. Get here first.
Stage 2: One month of essential expenses
Essentials only: rent, groceries, utilities, phone, transit. Not entertainment, not dining out. Know this number exactly.
Stage 3: Three months of full expenses
Now you're protected against job loss. At this point you have real security. Many Canadians stop here — which is reasonable.
Where to keep it
High-interest savings account (EQ Bank, Oaken Financial, Tangerine) currently offering 4–5% interest. Not a chequing account. Not a GIC (too illiquid). Liquid but not too accessible.