Emergency Savings Calculator (Canadian)
Having adequate emergency savings can make unforeseen unemployment, auto repairs, medical emergencies, property damage and even legal issues more manageable. With adequate emergency savings, you can focus on how to best meet your family's needs, rather than worrying about finding the money to handle these difficult situations. This calculator helps you determine how much emergency savings you may need, and how you can begin saving toward this important goal.
Emergency Savings Calculator (Canadian) Definitions
- Amount currently saved
- Total you currently have saved that should be included in this analysis.
- Amount to save per month
- The amount you will contribute each year to your emergency savings.
- Monthly living expenses
- Your total monthly living expenses. This amount should be your total expenses, not your total monthly income. Remember to include your home or rent payments, food, clothing, gas, phone and other monthly expenses. This amount does not need to include monthly savings or contributions to retirement accounts.
- Months of unemployment
- The number of months you expect it will take to find a new employer if you become unemployed. The time it takes to find a new job can range anywhere from one month to more than a year. It is important to be realistic in your unemployment estimate. Covering living expenses if you become unexpectedly unemployed can be your largest emergency expense.
- Emergency medical
- Total amount you may need in a medical emergency. Don't include amounts that will be covered by insurance. Also, insurance deductibles should not be included in this amount.
- Emergency auto repair
- Emergency auto repair costs. Don't include amounts that will be covered by insurance. Also, insurance deductibles should not be included in this amount.
- Emergency legal
- Emergency legal costs such as legal defenses for civil suits or criminal accusations. Don't include amounts that will be covered by insurance. Also, insurance deductibles should not be included in this amount.
- Emergency property damage
- Total amount you may need in an emergency involving damage to property such as your home. Don't include amounts that will be covered by insurance. Also, insurance deductibles should not be included in this amount.
- Emergency other
- Any other amounts that may be required in an emergency not included in medical, legal, auto or property categories.
- Insurance deductible medical
- The amount you are required to pay for medical expenses before your insurance coverage begins. Some medical insurance only covers a portion of your expenses after your deductible has been paid. If your insurance does not cover 100% of your expenses after you have paid your deductible, you may wish to enter your total maximum out of pocket costs here, which may be considerably higher than your deductible alone.
- Insurance deductible auto
- The amount you are responsible to pay on auto insurance claims before your insurance covers any expenses. Deductibles for auto insurance commonly range from $100 to $500.
- Insurance deductible property
- The amount you are responsible to pay on property claims, such as storm damage to your home, before your insurance covers any expenses. Deductibles for home or property insurance commonly range from $250 to $1000.
- Insurance deductible other
- Any other insurance deductibles that may be required in your emergency fund.
- Rate of return
- This is the annually compounded rate of return you expect from your investments before taxes. The actual rate of return is largely dependent on the type of investments you select. For example, the total return including dividends of the S&P/TSX Composite Index for the 10 year period from December 31, 2010 through December 31, 2020 was 5.9% (source spindices.com). Savings accounts at a bank or credit union may pay as little as 2% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
Since emergency savings may need to be accessed at any time, most people should use a conservative interest rate similar to a saving account and not rely on more risky investments such as stock or bonds.
- Federal tax rate
- Your marginal federal tax rate. This calculator assumes that you pay federal taxes at this rate on any interest earned. This calculator also assumes that your taxes are taken out of your savings as they are earned, instead of at the end of the year. **TAXTABLE_CURRENT_DEFINITION**
- Provincial tax rate
- Your marginal provincial tax rate. The assumptions for provincial taxes are the same as those for federal. This calculator assumes that you pay provincial taxes on any interest earned. This calculator also assumes that your taxes are taken out of your savings as they are earned, instead of at the end of the year.