Questions tagged [emergency-fund]

to be used for any question related to emergency, "rainy day", or reserve funds for an individual or family. The question can be related to calculating, creating, managing or understanding the need for emergency funds.

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93
votes
11answers
10k views

Where can I park my rainy-day / emergency fund? Savings accounts don't generate much interest

Savings accounts don't seem to generate much interest. What other options do I have for my emergency fund?
75
votes
14answers
15k views

What emergencies could justify a highly liquid emergency fund?

I've seen several questions (e.g. here) that challenge the need for complete liquidity in an emergency fund. Answers often focus not just on the potential for market downturns to affect your ability ...
53
votes
9answers
11k views

Why do I need an emergency fund if I already have investments?

A lot of financial advisers say you should have an emergency fund, in addition to whatever else you're doing. I don't really see the benefit, but let me be more specific. I definitely see that it's ...
44
votes
7answers
8k views

Using Emergency Fund to Sell Upside-down Car

My husband and I have an upside-down car loan, which means that we owe more on the loan (about $10,000) than the car is worth (only about $7,000). We are paying a pretty substantial amount each month ...
37
votes
13answers
37k views

Is there a good rule of thumb for how much I should have set aside as emergency cash?

I'm buying my very first home, and should be receiving the $8,000 first-time home buyers tax credit. A majority of my savings are going to the down-payment of the house, but we still have a pretty ...
36
votes
6answers
6k views

Is there an advantage to keeping a liquid emergency fund if one also has an untapped line of credit?

I've seen several financial advice websites and books that recommend keeping some amount of money (usually a function of your monthly expenses) in cash as an emergency fund. See for example questions ...
27
votes
7answers
2k views

Importance of liquidity in emergency fund?

I know standard rules of thumb are that it is a good idea to have a liquid emergency fund of between of anywhere from 3-8 months of expenses (depending upon the source). How important is liquidity ...
27
votes
5answers
2k views

Where should I park my rainy-day / emergency fund?

This is the US companion of the same question for Canadians Where can I park my rainy-day/ emergency fund?. Basically I want to know what options I have for my emergency fund?
25
votes
8answers
6k views

Should Emergency Funds be Used for Infrequent, but Likely, Expenses?

Say we break down non-monthly costs into the following three categories. High level of predictability: This would include oil changes that may be needed every 2 to 4 months depending on usage, car ...
25
votes
5answers
9k views

How much money should I lock up in my savings account?

I'm a 28 software engineer. I make around 26k, of which about 40% I set aside every month. In my two-and-a-half years working I now have about 24k savings. I've recently opened an account that allows ...
24
votes
4answers
18k views

How much (paper) cash should I keep on hand for an emergency?

I used to keep $150 hidden in my car for emergencies. I keep less than $100 in small bills in a backpack with food and water for use during natural disasters. I've got a fire safe in my house for ...
22
votes
3answers
5k views

Are precious metals/collectibles a viable emergency fund?

My friend received a gift from a family member in the form of silverware. The exact value is unknown but it is enough to cover 6+ months worth of expenses. It is stored in a place of residency to be ...
21
votes
8answers
7k views

Strategy to pay off revolving debt while building reserve savings fund?

We currently have about $16K cash. I'd like to have $30-35K+ for a ~6 month reserve. This will be a "single giant reserve fund" that will pay for large and/or unplanned expenses, frivolities like ...
21
votes
8answers
5k views

How risky is it to keep my emergency fund in stocks?

Everybody says you should keep an emergency fund of 3–6 months of expenses in cash or near-cash (CDs, treasuries, etc.). I know this is heresy but if you have funds for significantly more than 6 ...
20
votes
4answers
4k views

Should my rainy day fund be fixed or should I increase it by a little every month?

I've just started working and I'm building up several of my investments (mortgage preparation fund, general savings fund, rainy day fund, wedding fund). As for the mortgage, wedding fund, and general ...
19
votes
3answers
20k views

Should I pay off zero interest debt early?

My cash reserves are around $11k, including an emergency fund of about a month and a half, and I budget rigorously. The only debt I have is $7k at zero interest, paid at $300/month, and it's from a ...
19
votes
2answers
499 views

What should I reserve “emergency savings” for?

Should I reserve my "emergency savings" solely for times of unexpected unemployment, or keep these savings flexible enough to cover other unforeseen critical needs?
12
votes
8answers
735 views

What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund?

I'm looking for expenses that most of us should be planning for, but that we may not think about. Some of these would be re-occurring expenses that happen infrequently, while others would be one time ...
12
votes
3answers
5k views

Should I prioritize my 401(k) over my student loans?

Lately things have been a bit tight. Between student loan payments, my HSA, my 401(k) and bills my account balance isn't going up or down, its stagnant. I am wondering if I should decrease my savings ...
12
votes
2answers
1k views

Where should I store some cash that I need to be somewhat liquid?

I've got under $10,000 that I want to put somewhere more awesome than my no interest checking account. So far American Express Personal Savings at 1.15% APY is sounding nice. I can transfer out of it ...
12
votes
3answers
3k views

What percent of salary should go towards retirement vs. emergency savings?

What percent of salary should go towards retirement vs. emergency savings? Should some be set aside each and every pay for emergencies?
10
votes
4answers
755 views

Should I switch to this high rate checking account for my emergency fund?

Okay, so I bank at a local credit union, AllegacyFCU. (Here is their rates sheet.) Currently I have through this bank: Daily Access Savings account with 0.2% interest Totally Free Checking (no ...
10
votes
4answers
364 views

Homeowners: How can you protect yourself from a financial worst-case scenario?

Say your a home-owner, a first time buyer. You've just got your first flat and your about 1 year into your 25 year mortgage. Suddenly, something goes wrong with your job, and your made redundant (...
9
votes
3answers
2k views

Is it a right decision to pull money from emergency fund to buy a liability but need?

I have an emergency fund and some money saved to buy a car which is my need. The newer versions of the car can be bought if I pull a major portion of the money from my emergency fund. My job would ...
9
votes
5answers
1k views

Should your rainy day / emergency fund be in the same account as general savings?

Should your rainy day / emergency fund be in the same account as general savings?
9
votes
4answers
896 views

What expenses should be covered by an emergency fund

Going along with this question, what items should we be planning to pay in a month from our emergency funds? Rent / mortgage Groceries Electricity / gas / water / sewer / garbage Car payments ?? I ...
9
votes
2answers
437 views

How much is enough to save as a rainy-day fund before I start plugging my higher-interest student loans?

Typically, what is considered realistic? 6 months expenses? A year? I understand this is more of an "opinion" question but I am still curious what people think is a responsible buffer (in the event of ...
8
votes
5answers
2k views

Roth IRA = Emergency Fund. Any Safe Investments?

I've been building my emergency fund through automatic deposits into a Roth IRA at TDAmeritrade. This has been working well, since the money is out of sight, out of mind, and I can easily withdraw it ...
8
votes
6answers
544 views

Should I prioritize paying down my higher interest debt over building an emergency fund, or vice-versa?

I have a debt of $15,000 at a yearly interest rate of 9%, which can be paid within 5 years. Would it be better for me to: Build first the emergency fund (e.g. liquidity for 6 months' expenses ...
8
votes
3answers
471 views

Should I dip into an emergency fund to cover expenses for a rental property or only use it to make emergency repairs, improvements, etc.?

My wife and I are looking to purchase a home in the near future. With this in mind I am curious about how we should now look at our emergency fund situation. The general guideline you will see is ...
8
votes
3answers
473 views

Should I keep my emergency fund in a Roth IRA

I have been thinking about putting my emergency fund into a Roth IRA (in an FDIC insured High Yield Savings Account, so liquidity isn't an issue). My reasoning is as follows: I can always withdraw my ...
7
votes
3answers
217 views

Emergency and Community Fund for families

We are about 20 families with common background and roots living in Massachusetts, closely related. We organize a reunion once a year. We also try to help each other financially when we can. To ...
6
votes
5answers
383 views

Clear (agreed) overdraft or start emergency fund first?

From what I have read, the general consensus is that it is best to set up an emergency fund first and foremost before beginning the process of clearing debt, regardless of how illogical that approach ...
6
votes
1answer
8k views

How many weeks of living expenses does the average American have savings for?

I've heard that an average American has only enough savings to cover 3 weeks worth of living expenses. (I think it was on some radio show.) Is it true? If so, does anyone have the source?
6
votes
5answers
284 views

Is it worth the hassle to open a reward checking account for 4.09%?

I am trying to decide what to do with my emergency fund. Looking around I found a bank giving out a 4.09% APY up to $10K USD. This will generate approximately $34 USD/Month. They require that you ...
6
votes
3answers
231 views

How does the importance of a cash emergency fund change when you live in a country with nationalized healthcare?

In one of the answers to this question, it was mentioned that the primary cause of bankruptcy in the US is related to health expenses, and this is one reason to keep an emergency fund. Since most of ...
6
votes
5answers
2k views

Less than a year at my first job out of college, what do I save for first?

I have heard that 6 months of basic living expenses (about $11,000 usd for me) is a good idea to keep around in case of an emergency. Does this mean that All of my savings every month ($800 every ...
5
votes
2answers
4k views

How much cash on hand should one have?

The basic question is how much of my 'money' should I have on hand (ready to spend immediately) as opposed to putting it all in a high-yield (or at least inflation-fighting) investment? For instance, ...
5
votes
2answers
224 views

Should You Pay Off A Low Interest Loan From Emergency Fund

I have a car loan that is pretty low interest at 3.49%. It has 3k left and I have enough to take it out and still have an emergency fund for rent, and the small student loans I still have. Each month ...
4
votes
3answers
604 views

How should we prioritize retirement savings, paying down debt, and saving for a house?

My wife and I are newlyweds. We currently have 6 months' emergency fund (3 months are currently in a CD, and 3 months in a high-yield savings account.) We are contributing to get the full match in her ...
4
votes
2answers
1k views

Whole Life Insurance As Inflation-Protected Liquid Cash Savings (Emergency Fund)

A financial advisor (Northwest Mutual) told me I should buy a whole life insurance policy as an inflation-protected liquid cash savings. What he said is that while the yield is low, in the long term (...
3
votes
3answers
1k views

When determining the size of one's emergency fund, do you also count hypothetical unemployment benefits?

Most sources say to have about 6-12 months of living expenses saved up in the event of a job loss. Is it wise to add the 6 months worth of unemployment benefits to the total of cash you have saved up? ...
3
votes
3answers
1k views

What investment options should I consider for my emergency fund?

I have an emergency fund with 3 months of income saved up. It is currently in a money market earning less than 1%. This money is saved in case I lose my job or need to make a major repair on my home. ...
3
votes
3answers
353 views

Buffer/emergency fund - correlation with age and wealth

I am getting out of debt and looking into setting up a small buffer for any possible emergencies before I start investing into stocks etc. Is there any guideline as to how much of a buffer one should ...
3
votes
1answer
580 views

Savings account with mango money for emergency fund

I have just started my career a couple of months back and plan to save money for emergency funds. I was browsing the internet for a good savings account and came across Mango Money savings (6% APY ...
3
votes
1answer
431 views

How to find a savings or money market account with a high interest rate / yield?

I have my emergency fund in an ING Direct savings account. The saving account does not really give a good return and I was wondering what are my options? I want to put the money in some sort of ...
3
votes
2answers
357 views

Using a cash accumulation fund as emergency savings

My employer offers a cash accumulation fund alongside my group life insurance, with monthly contributions of up to $300. The interest rate is above most regular savings accounts, and like all cash ...
3
votes
3answers
208 views

Taxable money market fund vs. tax-free money market fund for emergency money?

I am trying to choose between a taxable or tax-free money market fund for my emergency money. What are the high level guidelines to choose one over the other? I know that the tax-free typically has ...
3
votes
2answers
174 views

Can I rely on my home equity to finance large home repairs?

There are certain "big ticket" home repair items with long expected lifetimes, such as your furnace or your roof, that could fail suddenly before that lifetime is up and need immediate replacement. ...
2
votes
2answers
713 views

Hard time keeping money in the bank

I have a hard time keeping extra money in the bank (in addition, building on an emergency fund). It's not that I spend it...its that I immediately transfer it either to Fidelity to fund a 401k/roth ...