Emergency Savings
Saving is essential if you want to have funds available for the inevitable “rainy days” of life. We recommend building to the following levels:- $500
- $1,000
- 3 months of essential spending
- 6 months of essential spending
Emergency savings can be kept in checking accounts, savings accounts, or as cash on hand.
FAQs
The Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) cover principal balances up to $250,000 per depositor per institution per ownership category. This makes spreading funds across multiple institutions more difficult to maintain with lower cumulative balances for interest accumulation.
Online high-yield savings accounts are a great option to use in conjunction with your primary banking institution. These accounts provide a much higher interest rate while maintaining liquidity and principal protection.
Online savings accounts are very easy to establish and maintain, and they allow you to transfer funds to your primary bank accounts through electronic transfers.
Yes! The act of saving regularly is more important than the dollar amount saved. Establish an automatic deposit to an online savings account and watch the balance grow.
Resources
Articles
- How to Build an Emergency Fund (Investopedia)
- How to Save for an Emergency Fund (Consumer Reports)
Tools
- Save Early Calculator (DMBA)
- Saving for Emergencies Calculator (DMBA)
- Electronic Deposit Insurance Estimator (EDIE) (FDIC)
- Emergency Fund Calculator: How Much Will Protect You? (Nerdwallet)
- Letting NerdWallet do the work for you is genius (Nerdwallet)
- Level up your financial wellbeing with Bankrate's expert tools and guidance (Bankrate)