5 Options For Where to Stash Your Emergency Fund Money

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Male hand putting coin into a piggy bank

Ah, emergency funds. Depending on your age and salary, you may think either:

  1. “I’ll never need that,” or
  2. “I’ll never be able to fund that.”

Of course both of those statements are false. While we all hope that we’ll never need to dip into our emergency savings, the very definition of the word “emergency” conjures up the image of surprise, which is exactly what your emergency fund is meant to help you out with — surprise costs. In terms of funding one, on the other hand, while that may take a little maneuvering on your part of determine how to best fit it into your budget, consider an investment in your emergency fund an investment in yourself … now doesn’t that make it sound so much more important?

Whatever you have to tell yourself to get to the point where you finally understand that you need an emergency fund, remember that experts suggest saving three to six months of your take-home pay in an easily accessible account. Before you let that number scare you off, remember that eventually you’ll hope to have that amount saved — for now your first step is to start saving at all.

Baby steps.

So where exactly should you start saving once you’ve determined that you actually are going to start saving? A few of the more common places people keep their savings include:

  1. Checking accounts: These types of accounts are convenient and easy to access, sure, but you’ll be hard-pressed to find a checking account that will score you any interest (or at least any interest worth considering), so we’d suggest keeping this as a last resort.
  2. Savings accounts: With higher interest rates than checking accounts and an FDIC backing of up to $250,000, savings accounts make a solid savings option. Check here to compare different savings account options, and here for five great online savings account options.
  3. Money markets: If you’re looking for something that’s insured and offers competitive interest rates, you can look into a money market, but these types of accounts will still offer lower rates than some other options.
  4. Certificate of deposit (or CDs): CDs are insured accounts with fixed interest rates (meaning if rates go up in general, yours won’t), and there is generally a minimum deposit required and penalties for early withdrawals. CDs don’t necessarily make the best options for an emergency account because of those penalties, since the point of an emergency fund is that it should be easy to access for free.
  5. Money market mutual funds: Although these accounts aren’t insured, there’s limited risk because of the short maturity of your investment, and they usually offer some checking privileges as well. Keep in mind most also usually come with minimal balance requirements, typically around $500 to $1,000 to start.

For more on the ins and outs of emergency funds, how to get started and some other options on where to keep your cash, check out this in depth piece about the ultimate guide for handling your emergency fund.

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Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at [email protected]

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