Is now the time to start your emergency fund?
With rising interest rates, inflation, and job uncertainty, more Albertans are asking this question—and the answer is a clear yes.
An emergency fund gives you peace of mind and real protection when life throws you a curveball. And the best way to build one? A Tax-Free Savings Account (TFSA)—simple, flexible, and powerful.
In this quick read, we cover:
- Why now is the smartest time to prepare
- What history tells us about investing during tough markets
- How automatic TFSA contributions can quietly grow into serious support
- Real-life examples of how your money could grow over time
Why Now?
Uncertainty brings risk-and preparation is key. Whether it's an unexpected home repair, a dental emergency, or a short-term income loss due to a layoff, job action, or health crisis, an emergency fund provides peace of mind and protection.
According to a 2023 survey by the Financial Consumer Agency of Canada, 44% of Canadians say they don't have enough savings to cover an emergency of over $500. And with interest rates and job market conditions in flux, the need to prepare has never been greater.
A Lesson from History: What If You Had Invested During the 2008 Crisis?
Many people hesitate to invest during volatile markets. But history shows that investing during downturns can lead to strong long-term gains.
In 2008 financial markets had one of the largest selloffs in history. People who were invested then could have gone one of four ways:
- Hold fast - stay in the markets but don't put in anything extra
- Take advantage of the dip and put in a lump sum of cash
- Get out of the markets and come back a year later when things are more stable
- Stay the course but add $100 / month automatically (through Pre-Authorized Chequing)
The biggest return - by far - is by those who put in a lump sum when markets were down. But those who decided to ignore short-term markets and keep contributing every month did almost as well.
For most of us who don't have a lump sum of cash sitting around waiting to be deployed, this is the way to go.
Use a TFSA to Build Your Emergency Fund
The Tax-Free Savings Account (TFSA) is ideal for building your emergency fund:
- Tax-Free Growth: Interest and investment gains are never taxed
- Flexible Withdrawals: Withdraw anytime, for any reason
- Contribution Room Restores: Withdrawals get added back the following year
Realistic Examples: Automatic saving with two different interest rates.
Let's say you contribute $200/month into a TFSA with 3.5% interest, compounded monthly.
In 5 Years:
- Contributions: $12,000
- Total with interest: $13,071*
- Growth: $1,071*
In 10 Years:
- Contributions: $24,000
- Total with interest: $28,404*
- Growth: $4,404*
This is at fairly conservative rates of return. Market returns have historically been much higher. If your average annual return was 6% - well below many historical high-growth returns - it would look like this:
In 5 Years:
- Contributions: $12,000
- Total with interest: $14,076*
- Growth: $2,076*
In 10 Years:
- Contributions: $24,000
- Total with interest: $31,233*
- Growth: $7,223*
*Estimate figures only
TFSA Emergency Fund FAQs
Q: How much can I contribute to a TFSA?
A: As of 2025, the total lifetime TFSA limit is $102,000 if you were eligible since 2009. Annual limits are adjusted yearly (e.g. $7,000 in both 2024 and 2025).
Q: Will I lose contribution room if I withdraw?
A: No. Withdrawals are added back to your contribution room the next calendar year.
Q: Can I access it quickly if needed?
A: Yes. TFSA funds are fully accessible without tax or penalty.
How to get started
Starting your TFSA with us is an easy sign up - just go to the Forms section on our website, select the TFSA digital application and fill out the two-page form to get started.
Our TFSA is built with a default investment - the Balanced Portfolio from Portfolio Solutions Group (PSG). It's built for a longer-term balance between portfolio growth and income at reduced volatility levels.
Or, if you'd like a more customized look at your needs, please contact us to answer questions, or set an appointment to go through your own plan!
KEY TAKEAWAY: Start Now, Even If It's Small
Starting an emergency fund during uncertain times is not only smart-it's essential. Begin with what you can, automate your contributions, and let compound growth and tax-free investing do the rest.
If you're on the fence, ask yourself this question: "If an emergency happens and we haven't made a plan, what then?"
