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Nearly one in three Canadian families struggle to handle a sudden $2,000 expense. This shows that having an emergency fund is crucial.
With rising inflation and job changes, unexpected bills are more common. These can include costs for health care, car fixes, or home upkeep. It’s vital to have emergency savings ready. This way, you won’t need to use credit cards with high interest or payday loans.
This article will show you how to set up and keep an emergency fund. It helps protect your immediate financial needs without using RRSPs or TFSAs. You’ll discover effective strategies, the best places to save, when to dip into your fund, and tips on replenishing it after use.
Continue reading to learn how to handle financial uncertainty with confidence. Secure your family’s finances against the rising expenses of living, utilities, and childcare.
What is an Emergency Fund?
An emergency fund is money saved just for unexpected costs or if your income stops. It’s not for retirement or long-term goals but is easy to get to when you need it. It helps keep your everyday money matters smooth during surprises.
Definition and Purpose
An emergency fund is money kept aside for urgent needs. This includes losing your job, paying for sudden medical needs, fixing your car quickly, or home repairs. It’s important to keep this money easy to reach and safe, so you don’t lose any.
These funds are different from investments that aim to grow over time. They’re about being ready and safe, not making a lot. For many people in Canada, this means keeping their money in a place where they can get it quickly without losing any value.
Importance for Financial Stability
Having an emergency fund makes your financial life more stable. It keeps you from selling things at a bad time or using expensive debt options like payday loans. This way, your credit score doesn’t take a hit when things get tough.
But it’s not just about the money. Knowing you have a safety net lowers stress and helps you make better choices in emergencies. Feeling secure can make a big difference in handling money and life’s challenges well.
The Current State of Finances in Canada
Canadians are navigating the tricky waters of their economy. Recent changes in inflation and interest rates strain budgets. This makes having a financial backup plan vital.
The Bank of Canada has raised interest rates. This action bumps up mortgage and loan payments. It’s crucial to have savings to avoid debt traps.
Impact of Economic Changes
Prices for groceries, fuel, and services have gone up. When wages don’t catch up, it’s harder to buy what you need. The move to short-term jobs also makes earnings unpredictable.
Changes in jobs can lead to uncertain pay periods. This shows why it’s smart to have emergency funds for rough times.
Rise in Cost of Living
Living costs, including housing and food, are on the rise in Canada. In places like Ontario and British Columbia, saving enough for emergencies is even more important. Each area demands its own savings strategy.
Everyday expenses are growing. An emergency fund prevents you from reaching into savings or incurring new debt. It’s your first defence against financial surprises.
| Factor | Typical Effect on Households | How an Emergency Fund Helps |
|---|---|---|
| Inflation in essentials | Reduced disposable income; tighter monthly budgets | Provides short-term spending flexibility to cover groceries and utilities |
| Higher interest rates | Increased mortgage and loan payments; greater debt servicing burden | Creates a buffer to meet higher monthly obligations without default |
| Labour market shifts | Income volatility for gig and contract workers | Offers liquidity during income gaps; stabilizes cash flow |
| Regional housing pressure | Larger housing costs in provinces like Ontario and BC | May require a larger financial cushion tailored by location |
Key Reasons to Establish an Emergency Fund
Building a solid savings buffer gives you peace of mind during tough times. A full rainy day fund lets you handle sudden costs without dipping into long-term savings or credit. Here’s why emergency savings are essential.
Financial Security During Uncertainty
A liquid emergency savings account supports you for months if you lose your job, face business slowdowns, or meet sudden family needs. Knowing how much you need helps you build a sufficient savings cushion.
With reserve funds, you can cover rent, utilities, groceries, and medical bills. This helps you avoid quick, poor financial choices that hurt you in the long run.
Avoiding Debt Accumulation
Emergency costs on credit cards or payday loans usually cost more than keeping investments. Canadian credit cards have high interest rates compared to what you earn from savings accounts. Emergency savings stop interest from piling up on debt.
Using your emergency fund means avoiding penalties, high interest rates, and debt collectors. Your home loan and retirement savings like RRSPs and TFSAs remain safe.
Peace of Mind in Crisis Situations
Emergency savings reduce worry. They let you concentrate on solving problems, like finding a new job or getting medical care. Clear thinking improves your dealings with people you owe money to.
This fund keeps your long-term investments safe, letting you bounce back faster from setbacks. It also means you can make wiser choices after a crisis.
Being ready for unexpected medical bills, urgent home heating fixes, car troubles, and surprise caregiving shows the value of a savings buffer. It stabilizes your daily life and protects your financial plans.
| Scenario | Typical Cost (CAD) | Why Emergency Savings Help |
|---|---|---|
| Job loss | $3,000–$6,000/month | Maintains living standards while searching for new work; avoids debt accumulation. |
| Urgent home heating repair | $800–$2,500 | Prevents displacement in winter; keeps emergency funds from being drawn from retirement accounts. |
| Car breakdown | $500–$3,000 | Ensures continued commute to work and medical appointments without high-interest borrowing. |
| Sudden medical expense | $200–$5,000 | Allows timely care and reduces stress, improving recovery and decision-making. |
How Much Should You Save?
Setting a goal for your emergency fund might seem hard at first. Begin with easy rules. Then, adjust them to fit your situation. This way, you create a safety net that’s there when you need it.
Industry Recommendations
Experts often say to keep three to six months of living costs ready. For those with unstable jobs, self-employed, or as the only breadwinner, having six to twelve months saved is usually recommended.
To figure out your savings goal, start by listing your must-pay expenses. These include housing, utilities, food, insurance, and the least debt payments. Then, multiply this monthly amount by the months you want to cover. This helps you set a realistic savings goal.
Personal Financial Situations to Consider
Change these suggestions based on how steady your job is, how many people depend on you, and your debts. Think about your health, major life changes ahead, and any government support you might get, like EI. These affect your plan.
Don’t forget to add in other resources you can easily get to. Like money in a TFSA or emergency savings, or even support from a spouse. These lower how much cash you need on hand right away. Make sure your savings goal reflects what you truly have available.
Test your emergency plan by pretending to face tough times. Imagine losing your job for six months or facing a big, sudden expense like a $5,000 car fix. See if your emergency fund would cover these. Adjust your savings goal based on what you find.
| Household Type | Suggested Coverage | Key Considerations |
|---|---|---|
| Standard employee, stable job | 3–6 months | EI access, steady pay, low volatility |
| Self-employed or contract work | 6–12 months | Irregular income, business expenses, tax obligations |
| Single earner with dependants | 6–12 months | Childcare, family health costs, higher fixed expenses |
| High debt or medical needs | 6–12+ months | Ongoing payments, treatment costs, reduced mobility to earn |
| Supplemented by liquid assets | Lower target possible | TFSA, non-registered savings, line of credit availability |
Where to Keep Your Emergency Fund
Choosing the right spot for your emergency fund is key. It should be accessible easily and safe. At the same time, it should grow a bit, so it’s ready when you need it.
High-Interest Savings Accounts
In Canada, high-interest savings accounts are great for emergencies. Banks and online institutions like EQ Bank and Tangerine offer these. They have no fees, easy transfers, and connect simply with your checking accounts.
Look for good interest rates and easy access. Avoid fees and make sure your money is insured by CDIC. Also, know how fast you can use Interac e-Transfer in emergencies.
Other Safe Investment Options
Short-term GICs are good for a bit more return without much risk. By laddering GICs, you can access your money in portions.
High-yield TFSAs grow your money tax-free and are good as backup funds. Just keep it liquid if you might need it fast.
Credit unions offer deals like banks but with a focus on their members. Robo-advisors have options to keep your main amount safe while making it easy to transfer to a checking account.
| Option | Access | Risk | Typical Return | Best Use |
|---|---|---|---|---|
| Online HISA (EQ Bank, Tangerine) | Immediate transfers, low limits | Low | Modest | Everyday emergency fund |
| Short-term GIC (laddered) | Locked until maturity for each rung | Low | Higher than HISA | Reserve funds with planned access |
| High-yield TFSA | Variable, depends on investments chosen | Low to medium | Tax-free, can be higher | Longer-term emergency buffer |
| Credit Union Savings | Similar to banks, often local service | Low | Comparable to banks | Community-focused savers |
| Robo-advisor cash sweep | Quick transfers, linked accounts | Low | Modest | Automated savings buffer |
Think about the trade-offs. GICs lock up your money, but TFSAs keep it safe from taxes. For many, starting with a high-interest savings account works best. Then, put extra into GICs or a TFSA for a solid safety net.
Steps to Build Your Emergency Fund
Start by making a simple plan that divides a big goal into smaller steps. Figure out essential costs to know how much you need. Then, choose how long you want to save—three, six, or nine months.
Break down the total amount into monthly or weekly goals. This way, you can easily keep track of your progress.
Creating a Savings Goal
First, calculate your must-pay expenses like rent, utilities, food, and insurance each month. Multiply these by your chosen timeline to get your goal amount. If your goal is to save for six months, you’ll have a precise target.
Begin with an initial goal of $500 to $1,000 for immediate savings. See this as your very first step. Once you reach this, aim for the full amount you need for emergencies.
Make sure your accounts are clearly named and use different sub-accounts to keep your money safe. Set up automatic transfers to save easily. Most Canadian banks offer tools to help with this.
Practical Saving Strategies
Choose easy saving strategies that suit your daily life. Use apps that round up your spending to add small amounts to your fund. Opt for split direct deposits so a part of your pay automatically goes into savings.
Reduce spending on things you don’t really need. Stop paying for things you hardly use and eat out less. Sell stuff you don’t use anymore and put that money into your savings. Deposit any bonuses, tax returns, or gift cash directly into your fund.
Think of saving as a regular expense. Use reminders and charts to stay on track. Get a friend to help you stay accountable or use options like payroll deductions at work to keep saving regularly.
To build your emergency fund effectively: start with small steps, automate your savings, and gradually increase what you save as you become more confident or as your income grows. These strategies help you make consistent progress without feeling stressed.
The Role of Budgeting in Savings
Creating a solid financial cushion begins with a good strategy. Small changes in your budget planning can help save money for emergencies without affecting your daily life too much. The advice that follows teaches how to check your income and expenses, prioritize, and track savings progress.
How to Adjust Your Budget
Start by dividing monthly costs into fixed and variable types. Fixed expenses are things like your housing and insurance. Variable expenses include food shopping, transportation, and fun activities.
Then, try to spend less on things you don’t really need. Maybe cancel a service you hardly use. Eating out less often, just twice a month, can also save money. Put what you save into an emergency fund.
Don’t hesitate to call and ask for better deals on regular bills, such as internet or car insurance. Even small savings can make a big difference over time and help you save more easily.
Organize your spending: necessities first, debts next, then save for emergencies, and finally set money aside for other things like investments or vacations. Always treat saving for emergencies as important so your safety net can grow.
Tracking Your Progress
Keeping track of your savings can be simple. Canadians like to use Mint, YNAB, and RBC MyFinance Tracker. Or you can make your own spreadsheet to follow how your savings are doing.
Keep an eye on important numbers: how much you save each month, your progress towards your goal, how long until you reach your goal, and how big your emergency fund is compared to your necessary expenses. These numbers can tell you if you need to save faster.
Look over your savings plan every three months. If you get a raise or pay off a debt, put more into your savings. Regular check-ins help your savings stay on track with your life changes and keep your emergency fund up to date.
| Action | What to Track | Typical Impact |
|---|---|---|
| Identify fixed vs variable | Monthly amounts per category | Clarifies where to cut and frees funds for the fund |
| Trim non-essential spending | Subscriptions cancelled, dining out reduced | Immediately increases monthly contribution |
| Renegotiate recurring bills | New bill amounts and savings | Long-term reduction in living costs |
| Prioritise saving ladder | Order of payment priorities | Protects emergency savings before other goals |
| Use apps or spreadsheets | Balance, months-of-expenses, rate | Improves visibility through savings tracking |
| Quarterly reassessment | Progress vs target, changes in income | Allows timely increases to the financial cushion |
Common Misconceptions About Emergency Funds
Many people have strong but incorrect beliefs about saving. These mistaken beliefs can prevent families and professionals from saving properly. A closer look at the facts can clear up these common myths about emergency funds.
Myths vs. Realities
Some think a credit card can handle any surprise. It seems simple, but credit can increase long-term costs with interest. It can also lower your credit score if you miss payments. Others believe investing is better than saving because it may return more money.
However, investments might not be easy to get to quickly in an emergency. Some expect help from employers or government aid. But this support could be slow or not enough.
Emergency funds give you instant money for important expenses. This can include paying for rent, food, car fixes, or brief periods without work. Having your money easily available means you won’t have to sell investments when prices are down. Sudden financial needs can hit anyone, showing emergency funds aren’t just for those with less money.
The Danger of Underestimating Needs
Not having enough in emergency savings can lead to bad financial decisions. One person had to sell stocks at a low point to pay for health care. Another family used credit and ended up with high interest costs and a worse credit score. These examples stress the need for careful planning.
When figuring out how much you need, plan for more extended job searches and unexpected costs. Add extra money to your fund to handle surprises and any gaps. This helps avoid selling investments when their value is down or getting into high debt.
- Assume higher monthly expenses when planning.
- Expect longer job search periods than average.
- Keep reserve funds liquid for quick access.
When to Use Your Emergency Fund
It’s important to know when to dip into your emergency fund. Think of it as a backup for urgent, unexpected costs. These costs should be things that affect your health or daily life. Make sure each withdrawal is well thought out and recorded. This keeps you on track.
Defining Real Emergencies
Real emergencies are things that come up suddenly and you can’t put off. Examples are emergency medical treatments or urgent car repairs to go to work. There’s also major home heating failures in winter, or suddenly losing your job. Save your emergency funds for when these issues threaten your basic living needs.
Don’t use your emergency fund for things like vacations or impulse buys. Keeping your emergency fund for true emergencies helps you stay financially stable. This also helps keep your peace of mind intact.
Strategies for Withdrawal
When you need to use your emergency fund, write down why and when you used it. Only take out what’s absolutely necessary. Prefer doing a bank transfer or electronic withdrawal. This makes tracking and budgeting easier, and it’s good for tax reasons too.
Think carefully before you withdraw. If it’s a repair, get several estimates first. Also, check if warranties or insurance can cover it. Use your emergency fund after insurance options have been tried. This way, you don’t tap into your emergency savings more than needed and might even save some cash.
Understand the rules of your account before withdrawing. Taking money from a regular savings or a non-registered account is usually simple. Think twice before using a TFSA, as you can put the money back next year but try not to do it often. Avoid using your RRSP unless you absolutely have to, because of the taxes and its effect on your future savings.
Replenishing Your Emergency Fund
After using your emergency funds, make a plan to refill them. Begin by figuring out how much you used. Then, decide how fast you can replace it. Make this a key part of your budget to ensure you rebuild your safety net quickly.
Best Practices After Usage
Set up automatic deposits to your emergency account on payday. Making small, steady deposits works better than saving in big chunks now and then. If you get extra money like a bonus or tax return, put some straight into your emergency fund before you buy anything else.
Think about increasing your savings goal if your job situation or family needs have changed. Adding a bit more to your emergency fund can help you avoid using it too soon in the future.
Prioritizing Savings Again
Try cutting back on non-essential spending and save that money instead. This might mean watching fewer movies online or eating at home more often. If you’ve recently paid off a loan, put what you were paying on it into your emergency fund.
It helps to celebrate your savings success along the way. Use a chart or an app to track your progress. Seeing improvements can motivate you to keep going until your emergency fund is fully restored.
Future Considerations for Your Emergency Fund
When life changes, check your emergency savings. Reviewing your fund after big events keeps it aligned with your needs. This way, your household is safe if money situations change.
Adapting to Life Changes
After big life events like marriage or buying a house, look at your emergency savings. Changes in career or health can affect your income and costs. Tweak your savings goals and rules to ensure your fund stays helpful.
Discuss with your partner about who can access your account and who it goes to if something happens. For families, having clear plans helps avoid mix-ups. Make sure details in your will and your account contacts are the same.
Keeping Your Fund Relevant
Revise your budget for basic expenses yearly. If costs go up or you move somewhere pricier, add more to your savings. Small yearly increases help keep up with inflation and maintain your lifestyle.
Look for better savings accounts or GIC rates often. If your emergency fund grows big, move some to options that earn more but are easy to get to. This strategy gets you more money but keeps it accessible.
- Review timing: set calendar reminders every six or twelve months.
- Access rules: keep a portion instantly available and another in short-term instruments.
- Succession: confirm beneficiaries and power-of-attorney details for accounts holding reserve funds.
Conclusion: Take Control of Your Financial Future
Having an emergency savings plan gives Canadian families a solid backup for unexpected costs. It keeps long-term investments safe, avoids the need for costly credit, and maintains your budget during income or expense changes.
Begin with a small, achievable goal like saving $1,000. Set up automatic transfers to slowly increase your safety net. Every contribution to your emergency fund makes a big difference. It helps avoid debt during tough times.
Check and adjust your savings yearly. Keep your funds easy to access but safe. And always refill it after you dip into it. For specific advice, consider talking to Canadian banks like Royal Bank of Canada or Tangerine. You can also chat with a certified financial planner.
Building a rainy day fund is a doable habit that ensures you’re prepared for the future. With consistent efforts and smart habits, you’ll secure a strong financial buffer. This brings more calm to your life for many years to come.
FAQ
What is an emergency fund and why is it important?
How much should I aim to save in my emergency fund?
Where should I keep my emergency savings for the best mix of safety and access?
What counts as a real emergency — when is it appropriate to use the fund?
How do I start building an emergency fund if I’m living paycheque to paycheque?
FAQ
What is an emergency fund and why is it important?
An emergency fund is money saved just for unexpected costs or to cover living expenses if income stops suddenly. It’s not for long-term savings but for things like big medical bills, urgent repairs, or if you lose your job. This fund helps you avoid debt from credit cards or loans. It also lowers stress and helps you make better choices in tough times.
How much should I aim to save in my emergency fund?
You should save three to six months’ worth of basic living expenses. If you’re self-employed or the only one earning in your family, aim for six to 12 months. Figure out your essential monthly costs. Then multiply by the number of months you’re aiming for to know how much to save.
Where should I keep my emergency savings for the best mix of safety and access?
Put your emergency savings where you can get to them easily but still keep them safe. High-interest savings accounts are good choices in Canada. Short-term GICs or high-yield TFSAs are options if you know the rules about getting to your money. Always check how your money is protected and how fast you can transfer it before deciding.
What counts as a real emergency — when is it appropriate to use the fund?
Use your emergency fund for big, unexpected costs that you must pay right away. This includes things like emergency medical bills, urgent car repairs, or losing your job. Don’t use it for things like vacations or buying things you want but don’t need.
How do I start building an emergency fund if I’m living paycheque to paycheque?
Start small, aiming first for 0 to
FAQ
What is an emergency fund and why is it important?
An emergency fund is money saved just for unexpected costs or to cover living expenses if income stops suddenly. It’s not for long-term savings but for things like big medical bills, urgent repairs, or if you lose your job. This fund helps you avoid debt from credit cards or loans. It also lowers stress and helps you make better choices in tough times.
How much should I aim to save in my emergency fund?
You should save three to six months’ worth of basic living expenses. If you’re self-employed or the only one earning in your family, aim for six to 12 months. Figure out your essential monthly costs. Then multiply by the number of months you’re aiming for to know how much to save.
Where should I keep my emergency savings for the best mix of safety and access?
Put your emergency savings where you can get to them easily but still keep them safe. High-interest savings accounts are good choices in Canada. Short-term GICs or high-yield TFSAs are options if you know the rules about getting to your money. Always check how your money is protected and how fast you can transfer it before deciding.
What counts as a real emergency — when is it appropriate to use the fund?
Use your emergency fund for big, unexpected costs that you must pay right away. This includes things like emergency medical bills, urgent car repairs, or losing your job. Don’t use it for things like vacations or buying things you want but don’t need.
How do I start building an emergency fund if I’m living paycheque to paycheque?
Start small, aiming first for $500 to $1,000. Make saving automatic, maybe by moving a little from each paycheque into a savings account. Cut back on expenses, sell things you no longer need, and put any extra money like bonuses into your fund. Step up your saving as you can over time.
Should I use my TFSA or RRSP for emergencies?
Only use your TFSA for emergencies if you really have to because you don’t pay tax on what you take out. Avoid using your RRSP unless you have no choice. Taking money out of an RRSP can mean paying more in tax and saving less for retirement. Keep your emergency fund in accounts that let you get to your money easily without losing any of it.
How do interest rates and inflation affect the size of my emergency fund?
When interest rates go up, so do the costs of mortgages and debts. This means you might need more money saved to cover your bills. Inflation makes things more expensive, so you’ll need to save more over time to keep up. Check how much you need to save every year to make sure you’re still on track.
What are safe strategies for earning a bit more interest without losing access?
Check out high-interest savings accounts from online banks or credit unions for good rates. Break up your savings into short-term GICs to keep some money available. Put part of your fund in a high-yield TFSA for more interest, but keep enough cash handy for emergencies. Always think about how easily you can get to your money and keeping it safe.
How should I budget to prioritise building the fund?
Look at your spending and cut back on things you don’t need. Put money into essentials, paying off debt, and your emergency fund first. Make saving automatic and watch your progress. Adjust your plan as your financial situation changes, like if you get a raise or pay off a debt.
What’s the best way to replenish the fund after I’ve used it?
Make a plan to put money back into your fund as soon as you take any out. Use extra money like tax refunds to help. Cut back on spending for a while and celebrate when you reach milestones. If your life changes in ways that might mean bigger emergencies, think about saving even more.
Are there misconceptions I should avoid when planning emergency savings?
It’s not just people with low incomes who need an emergency fund. Depending on credit cards can be expensive and hurt your credit score. And don’t count on others like employers or the government to always help. Plan ahead and save more than you think you’ll need just to be safe.
How should couples or families manage a shared emergency fund?
Talk about your savings goal and decide where to keep your emergency fund. Make sure everyone knows what counts as an emergency. Keep track of why you take money out. Update your plan for big changes like getting married or having a baby.
How often should I review and adjust my emergency fund?
Check your fund at least once a year or when big things change in your life. Rework your budget for necessary expenses and see if you need to save more or less. Keeping your fund up to date helps it stay useful.
Can a line of credit replace an emergency fund?
Having a line of credit is okay but it shouldn’t take the place of having cash saved. Credit costs money in interest and can affect your credit score if you’re slow to pay it back. Cash savings give you quick, free access to money when you need it most. Only use credit as a backup plan.
,000. Make saving automatic, maybe by moving a little from each paycheque into a savings account. Cut back on expenses, sell things you no longer need, and put any extra money like bonuses into your fund. Step up your saving as you can over time.
Should I use my TFSA or RRSP for emergencies?
Only use your TFSA for emergencies if you really have to because you don’t pay tax on what you take out. Avoid using your RRSP unless you have no choice. Taking money out of an RRSP can mean paying more in tax and saving less for retirement. Keep your emergency fund in accounts that let you get to your money easily without losing any of it.
How do interest rates and inflation affect the size of my emergency fund?
When interest rates go up, so do the costs of mortgages and debts. This means you might need more money saved to cover your bills. Inflation makes things more expensive, so you’ll need to save more over time to keep up. Check how much you need to save every year to make sure you’re still on track.
What are safe strategies for earning a bit more interest without losing access?
Check out high-interest savings accounts from online banks or credit unions for good rates. Break up your savings into short-term GICs to keep some money available. Put part of your fund in a high-yield TFSA for more interest, but keep enough cash handy for emergencies. Always think about how easily you can get to your money and keeping it safe.
How should I budget to prioritise building the fund?
Look at your spending and cut back on things you don’t need. Put money into essentials, paying off debt, and your emergency fund first. Make saving automatic and watch your progress. Adjust your plan as your financial situation changes, like if you get a raise or pay off a debt.
What’s the best way to replenish the fund after I’ve used it?
Make a plan to put money back into your fund as soon as you take any out. Use extra money like tax refunds to help. Cut back on spending for a while and celebrate when you reach milestones. If your life changes in ways that might mean bigger emergencies, think about saving even more.
Are there misconceptions I should avoid when planning emergency savings?
It’s not just people with low incomes who need an emergency fund. Depending on credit cards can be expensive and hurt your credit score. And don’t count on others like employers or the government to always help. Plan ahead and save more than you think you’ll need just to be safe.
How should couples or families manage a shared emergency fund?
Talk about your savings goal and decide where to keep your emergency fund. Make sure everyone knows what counts as an emergency. Keep track of why you take money out. Update your plan for big changes like getting married or having a baby.
How often should I review and adjust my emergency fund?
Check your fund at least once a year or when big things change in your life. Rework your budget for necessary expenses and see if you need to save more or less. Keeping your fund up to date helps it stay useful.
Can a line of credit replace an emergency fund?
Having a line of credit is okay but it shouldn’t take the place of having cash saved. Credit costs money in interest and can affect your credit score if you’re slow to pay it back. Cash savings give you quick, free access to money when you need it most. Only use credit as a backup plan.
