Saving for an Emergency

Saving for a rainy day is just as important as saving for a specific goal. This is the best way to protect yourself financially in case of illness, injury, or other unexpected events.

How much do you need for an emergency?

It's a good idea to keep three to six months of essential living expenses easily accessible in case of an emergency. Keep in mind that you may want to save even more in your emergency fund if you might be changing jobs within the next year or are anticipating any other significant life changes.

Where to deposit your emergency fund.

In order to have fast access to your emergency cash, keep it in something safe and liquid such as one of the following:

• High-yield savings accounts or money market accounts: offered by a bank or credit union that may potentially pay a better annual percentage yield (APY) than traditional checking or savings accounts. However, be aware that high yield savings account rates are not fixed and can go up and down based on market conditions.
• Purchased money market funds: may provide higher returns but may require at least a day or two to sell funds into cash. Money market funds are considered low risk, but they can lose value. 

Each option has trade-offs in terms of withdrawals, account balance minimums, and interest. Choose what aligns with your risk tolerance and need for accessibility.

To make sure you're getting the best value, do some comparison shopping when choosing a bank or financial institution for your emergency fund. Review and compare the following:

• Minimum balance requirements
• Service fees
• Interest rates
• How often the bank pays interest

And be sure the bank you choose is FDIC-insured. Learn more about the types of accounts available.