Yes, you need an emergency fund…Here are five reasons why!

Finally, you’re earning an income that covers the bills and more, you’re on track to pay off your debt and indulge every so often …and suddenly, thanks to some unforeseen event, you’re back to overdraft, taking out advances against your credit card, or dipping into your condo down payment fund. Again.

In some personal finance circles, there’s talk of emergency funds becoming obsolete thanks to cheap interest rates and easy(ish) access to credit. But now that I’m well into adulthood, I realize how necessary an emergency fund is. Here are just five of the many reasons why you need one:

  1. You could lose your job.

Yes, employment insurance exists, but there’s a waiting period before you start receiving the funds. And in this economy, expect processing delays when you first apply, meaning that it can take up to three months before employment insurance benefits actually kick in. How will you cover your expenses in the mean time? And this is assuming that you’re eligible to receive E.I. benefits at all.

  1. You’re taking a leave of absence.

For family and/or personal reasons you may need to take a significant amount of time off—whether that means resigning from your current position, turning down freelance projects or taking a leave without pay. Do you have funds readily available that will allow you to take the time you need off without disrupting your financial situation?…

This is an excerpt from the article Cake: Yes, You Need An Emergency Fund which originally appeared on