Moving to Canada is full of opportunities, but also brings unique challenges. From finding a job and securing housing to setting up a bank account and shopping for a phone plan, there are many steps you’ll need to take to settle in. One key element to successful settlement is resilience—not just emotionally but financially too. Ensuring you have a solid emergency fund in place will create a buffer and protect against unexpected expenses. 

This guide will walk you through the following: 

• What Is an Emergency Fund?
• How to Set Up an Emergency Fund
• How to Start Saving for an Emergency Fund with a Limited Budget

What Is an Emergency Fund?

Put simply, an emergency fund is a dedicated savings account that you can dip into for unexpected and urgent expenses. It’s a financial cushion that helps protect you from going into debt or straining your budget during life’s surprises.

What an emergency fund is for:

• Urgent home repairs that can’t be delayed, like fixing a broken furnace or leaking roof.
• Sudden job loss, when you need a buffer to cover essential living expenses until you secure a new job.
• Necessary car repairs to keep your vehicle safe and operational.
• Unexpected travel for urgent situations, such as visiting a sick family member or attending a funeral.
• Unanticipated tax bills to avoid late fees and penalties.

What an emergency fund is not for:

• Leisure travel or vacations, which should have their own dedicated savings.
• Non-essential purchases like a new phone, computer, or home décor upgrades.
• Holiday or special occasion expenses including gifts, parties, or seasonal shopping.
• Sales on big-ticket items like furniture or electronics, even if it feels like a “good deal.”

How much should be in your emergency fund?

Financial experts recommend having enough to cover three to six months of living expenses. But the amount can vary depending on your situation. For example, if you have dependents, you may want to aim for a larger fund.

Here is a chart that provides a rough breakdown of how much money you could save depending on your specific circumstances.

Note: Keep in mind these are just general guidelines and would greatly depend on what part of Canada you live in.

Scenario	Suggested Savings Target
Single Newcomer	$14,000
Couple (No Dependents)	$18,000
Family (1-2 Children)	$22,000 – 27,000
Family (3+ Children)	$30,000 – $40,000

How to Set Up Your Emergency Fund

1. Determine Your Monthly Expenses

The first step to building an emergency fund is understanding how much you spend each month. Break down your expenses into categories like rent, groceries, transportation, utilities, and entertainment. You’ll need a clear picture of your essential costs before you know how much to save.

2. Set a Realistic Savings Goal

Once you have a sense of your monthly expenses, multiply that amount by three to six months. This will be your emergency fund goal. Don’t worry if that number feels overwhelming—it’s a long-term project. The key is to start small and be consistent.

3. Open a Separate, High-Interest Savings Account

To avoid dipping into your emergency fund for non-urgent purchases, open a separate account—preferably one that earns interest. A high-interest savings account or a Tax-Free Savings Account (TFSA) in Canada can help your money grow over time without incurring taxes on the earnings.

4. Automate Your Savings

Setting up automatic transfers from your checking account to your emergency fund makes saving much easier. Even if you can only afford to transfer $25 or $50 a month, automating the process ensures your savings grow consistently.

Check out the Budget Planner on the Government of Canada website to help get you started. 

How to Start Saving for an Emergency Fund with a Limited Budget

It’s understandable that saving for an emergency fund can feel impossible if you’re working with a tight budget. Here are some tips to help you get started, even with limited income:

1. Start Small

Even if your savings start at $10 a month, it’s progress. The important thing is to start. Focus on building the habit of saving, no matter the amount. Over time, you can increase contributions when your financial situation improves.

2. Cut Non-Essential Spending

Review your monthly expenses and look for areas where you can cut back. Are there subscriptions you don’t use often? Can you reduce dining out or entertainment costs temporarily? Redirect these small amounts to your emergency fund.

3. Save Unexpected Income

Tax refunds, bonuses, or gifts should go directly into your emergency fund. It’s an easy way to give your savings a quick boost.

Cost-Saving Resources for Newcomers

Here are some ways you can cut spending as a newcomer.

1. Buy Second-Hand and Shop Smart
   Setting up your home can be expensive, but there are affordable ways to get started. Consider using second-hand marketplaces like Kijiji or Facebook Marketplace, where you can find quality furniture and household items at lower prices. Many community organizations and local websites also host buy-and-sell groups that are free to join and can save you hundreds of dollars on essential items.
   
2. Use Public Transportation
   Instead of buying a car right away, take advantage of Canada’s reliable public transit systems. Some cities offer discounted transit passes, which can help you save on commuting costs. If you do need a car, consider car-sharing services or lease options to avoid the high upfront costs of buying.
   
3. Leverage Cost-Saving Apps
   Apps like Flipp help you find the best prices on groceries and household goods by showing weekly sales at local stores. Similarly, cashback apps like Rakuten  let you earn money back on purchases, stretching your budget further.
   
4. Take Advantage of Free Resources and Community Events
   Many local libraries offer free internet access, workshops, and community events, which can be helpful when you’re just starting out. Libraries also offer free or discounted passes to local museums and cultural sites, helping you enjoy your new city without overspending.

Conclusion

Building an emergency fund takes time, but it’s one of the most important steps you can take toward achieving financial resilience as a newcomer to Canada. Start small, set realistic goals, and make consistent contributions—even with a limited budget. With the right approach, you’ll have a financial safety net that provides peace of mind as you navigate your new life in Canada.

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Whether you’re planning to move or recently moved to Canada, Scotiabank can help navigate the process with banking packages that help newcomers succeed financially. With StartRight^TM get one free year of the Preferred Package [HG1] chequing account, unlimited free international money transfers and access to credit cards designed for newcomers.¹

¹ Terms and conditions apply; credit is subject to approval.

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This article is provided for information purposes only. Any information, data, opinions, views, advice, recommendations or other content included in this article are solely those of the author and not of Scotiabank or its affiliates. It is not to be relied upon as financial, tax or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article is subject to change without notice. All third party sources are believed to be accurate and reliable as of the date of publication.