This blog post sort of sell’s Wealthsimple’s “Smart Savings” account, but I still think the premise is sound. (In case you want to open a Wealthsimple account, here’s my referral link.)

In short, use a savings account to store your emergency fund and any cash you’ll need in the next three years. Absolutely perfect, sound rule of thumb.

Creating an emergency fund is tough and can take many years. Whether it takes 1 year or 10 years, the fallback confidence it provides is invaluable.

Something that’s worked really well for Jaclyn and I: We keep our emergency fund at a separate financial institution from our regular operating account and we don’t have a debit card to access the cash.

We physically have to go to the branch to withdraw the cash.

This extra step has been a great “barrier to entry” and really inhibits our ability to access the cash.

You could take it a step further and require dual signatures in order to withdraw cash, or you could keep the cash in a cash-only tax free savings account which requires 24 hours to withdraw funds.

Either way, the steps are simple:

  1. Create an emergency fund.
  2. Save it in a savings account and not in an investment account.
  3. Make it really hard to withdraw the cash.