Advertiser Disclosure

Strategies to Save

The Ultimate Guide to Handling Your Emergency Fund

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

emergency fund

Unexpected expenses have a way of popping up at the worst possible times. A good way to be prepared is having an emergency fund. An emergency fund is money put aside to use when something comes up and you need money right away.

One example of an unexpected financial emergency is a car repair – and they are not cheap. The average cost of car repairs after an accident can range anywhere from $50 to $1,500+.

The Federal Reserve recently reported that 4 out of 10 people in 2017 would have difficulty paying for a financial emergency of $400. Instead of having an emergency fund to rely on, these people may use credit cards to pay off the bill, only racking up more debt, or asking someone else to fund them the money.

Don’t let an unexpected expense put your finances in jeopardy. In this guide, we’ll explain how much to save in an emergency fund and where to keep yours stashed.

What is an emergency fund?

An emergency fund is money put aside specifically for an unexpected financial emergency. These funds are there to help you tackle an emergency so you don’t have to take on debt to cover expenses.

There are many reasons why you might need an emergency fund. Some of the most common scenarios include:

  • Handle an unexpected medical cost
  • Pay for car repairs after an accident
  • Provide liquid assets in the event of a job loss
  • Use toward an unexpected home repair

And once you use your emergency fund, it’s essential to start saving again right away. You don’t want to be unprepared for anything else that can come up.

Deciding how much to set aside for a rainy day is a question with multiple answers. In the next section, we’ll look at a few different rules of thumb for saving amounts.

How much money you should save

When you start saving money for your emergency fund, you should strive to cover your financial needs that are based on your individual income and living expenses. Single-income families may differ from dual-income families, and self-employed may differ than those who have full-time jobs.

Here are a few good rules of thumb when determining how much to save:

3 months: Best for singles

If you are single with a steady job, saving three months can work well. You only have yourself to worry about so it’s only your living expenses that will need to be covered, rather than those of a spouse or children.

6 months: Best for married couples with kids

Those who have a spouse and children will likely need to save more money than those who are independent. Six months should cover the costs for those who are married with a stable income and have young children living with them.

9+ months: Best for the self-employed

Anyone who is self-employed or with infrequent income, such as freelancers, can benefit by saving more than those who have a stable income. Nine months is a good go-to target. This way you’re able to pay for any unexpected emergency, such as car damage, or the loss of a client or project.

Where to keep your emergency fund

Now that you know why you should have an emergency fund, it’s time to decide which accounts are best to stow away your cash.

Two popular accounts for emergency funds are savings accounts and certificates of deposit (CDs). A savings account at a financial institution allows you to earn interest on your funds. Savings accounts can be ideal for emergency situations because it’s easy to write a check and access funds via wire transfer or an ATM.

CDs are deposit accounts which require you to keep your money stowed away for a particular time frame. In return for keeping your funds tied up longer, you can receive a higher rate of return than you typically would with a savings account

There are also CD ladders, which should not be confused with CDs. A CD ladder a strategy used to open multiple CDs with different terms. The idea is that you’ll have a new CD maturing every few months or so, giving you more flexibility in how often you can access the funds in those accounts.

With all the different accounts out there, it’s hard to know exactly why a savings account or a CD is the best option for emergency funds. But there are some distinctions to watch out for.

Unlike stocks and mutual funds, which have principal risk so you can lose money, savings accounts and CDs do not. This is incredibly important for an emergency fund. You don’t want your emergency fund to go down when the market does and therefore, not be able to withdraw the exact amount you need.

Why checking accounts aren’t the best options for savings

A checking account is similar to savings and CDs because it doesn’t have principal risk. You can access your money freely without any limitations, which can also be a negative. If you can access your funds at any time, you may find yourself withdrawing from your checking when it’s not necessarily an emergency. Plus, the rates for a checking account are usually much lower than those with a savings account or CD.

You want to be able to access your money when needed, but you also want to be able to save it so it’s there should an emergency pop up. A savings account allows you to get your money fast while CDs can take a few days and with a penalty. As for CD ladders, the full balance is not usually available, only a portion of what’s in your accounts.

Savings accounts vs. CDs for your emergency fund

When deciding on savings accounts or CDs for your emergency fund, there are several factors to take into consideration. Let’s take a look at the pros and cons for these two accounts to gain a better perspective on which might work best for you.

When savings accounts make sense

A savings account is a viable option for an emergency fund because you are able to place your money in a safe place and have access to it when you need it. As long as you follow the transaction guideline limits, you will not have to pay a fee, and you still earn interest on your money as long as it’s in the account.

  • FDIC insured up to $250,000 per account
  • Deposit as much as you want without restrictions
  • You can withdraw from your account six times per month without any penalties
  • Online banks offer very competitive rates on savings accounts, many times more than traditional banks
  • As rates rise, online banks tend to offer higher rates on deposit accounts as well
  • Some savings accounts allow for check-writing abilities


  • Interest can be lower than some CDs
  • Traditional banks offer rock bottom interest rates
  • May get hit with excessive transaction fee if you make a withdrawal/transfer from the account more than six times per month

When CDs make sense

While a savings account may have an advantage over CDs when saving money in an emergency fund, there are times when CDs may work better, such as for overflow savings. Once you have met your goal with your savings, you may want to invest the rest of your money (or a portion of it) into a CD or a CD ladder strategy to earn interest.

A CD or CD ladder strategy makes the most sense for those who don’t need the money right away or want ongoing access to it. If you take the money out before the CD term is up, you are at risk of paying a penalty fee. And remember, if you leave your money in there, you can get a higher rate of return.

  • FDIC insured up to $250,000 per account
  • Interest rates are usually higher than regular savings accounts
  • Rates are locked until maturity so they won’t fall


  • Rates are locked, which means they can’t rise
  • Possible penalties for early withdrawals
  • Restrictions on deposits

Best savings accounts for emergency funds

A savings account can be a good option for an emergency fund. MagnifyMoney has its own savings account marketplace to help compare and find the right account for you. Simply add your zip code and account balance to review your results instantly. To help get you started in your search, here are some of the best online savings accounts that may help you stow away cash for an emergency.


Marcus by Goldman Sachs Bank USA

Ally Bank


MySavings Account from MySavingsDirect






Linked debit card?





Ways to access your funds

- Funds transfer with linked account
- Wire transfer

- Funds transfer
- Wire transfer Phone transfer -Check request

- Online transfer
- Phone request
- ATM withdrawals

-Transfer funds electronically

Time to transfer funds

Next business day

3 days; can also be expedited for 1-day transfer

Immediately for outgoing transfers

2-4 days

What to look for when vetting emergency savings accounts

When searching for a savings account, it’s smart to check out online banks. Many times you can find higher yields without monthly maintenance fees tacked on.

Keep an eye on savings accounts that can offer limited check-writing abilities for easy access to your money. Also, look into the bank’s transfer requirements and restrictions.

“If you need to move money from the savings account to your checking account to cover an emergency bill, you’ll want the transfer to be fast without small-dollar limits on the transfer,” said Ken Tumin, editor of (also owned by LendingTree).

Best CDs for emergency savings

If you’re looking for CDs to help keep your emergency fund on hand, there are also many to choose from. Find some of the best CD rates directly on MagnifyMoney’s CDs marketplace by putting in your zip code and the amount you’d like to deposit.

Here are a few CDs you may want to keep an eye on as you begin your search.


Goldman Sachs Bank USA


Barclays Bank

Ally Bank

Terms available

6 months — 6 years

3 months — 5 years

1 year — 5 years

3 months — 5 years

Deposit required to earn starting APY



No minimum deposit

No minimum deposit

APY range

0.60% APY — 3.15%APY

0.75% APY — 3.10%APY

0.35% — 3.10% APY

0.75% APY — 3.10% APY

Early withdrawal penalty

For a CD term of less than 12 months, there is
“90 days simple interest on the principal at the rate in effect for the CD”

Starting with: 12 months or less terms are charged 90 days interest at “current rate”

Less than 24 months, there is a penalty equivalent to 90 days interest

There is an early withdrawal penalty for both high-yield CDS and raise your rate CDs; penalties vary and are determined on your CD term

What to look for when vetting emergency CD accounts

As with savings accounts, there are many options when shopping for CDs. Be sure to seek out banks that offer competitive rates, low early withdrawal penalties, interest withdrawal without penalty and bank-to-bank transfers that are done electronically so you can get your money the fastest.

6 tips for saving money for an emergency

Saving money for an emergency fund can seem daunting, especially when you are first starting to save. However, there are a few easy tips to help pave the path for a solid fund.

1. Make your emergency fund a priority

Start saving for an emergency immediately. Once you have reached your emergency fund goal, work on other financial plans and investments.

2. Adjust your budget

Cut down your spending habits and try your best to stick to a budget. Be truthful about your financial situation and don’t spend money you don’t have.

3. Use other cash sources

Try to put away cash received from other resources before you even miss it, such as work bonus, a raise or additional income from another resource. This way you won’t be worrying about trying to nickel-and-dime your paycheck to add money to your fund.

4. Don’t use your emergency fund for just anything

As your emergency fund grows, be sure to keep it there. You don’t want to use it on something else, such as a big, lavish purchase and then need it for a future emergency only to find it’s no longer there.

5. Be diligent about saving

Try to stick to your savings goal. Put away the same amount every month no matter what else may come up.

6. Pay down your debt

If you have a lot of debt, you’ll want to get that paid off as fast as possible. It’s hard to save when you have high bills (with high-interest rates) to pay off every month. Treat debt payments as a form of savings — just think about all the interest charges you’ll avoid by paying it off quickly.

You never know when a financial emergency might come up. Try your best to be well-prepared with an emergency fund. This fund will keep your money in a safe place so you can access it if an emergency should happen.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Carissa Chesanek
Carissa Chesanek |

Carissa Chesanek is a writer at MagnifyMoney. You can email Carissa here


Advertiser Disclosure

Strategies to Save

When Is It Okay To Tap My Savings?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Most personal finance advice preaches the gospel of saving, admonishing you to resist the temptations of restaurant meals, shopping sprees and other extravagant expenses. Sock away as much money as you can bear in some sort of savings product, they write. Prepare for the worst!

Let us reassure you that all those nights you suffered from FOMO and dined on leftovers were worth it. We’ve assembled a panel of expert financial planners to weigh in on when and why you should tap your savings, and how to do so intelligently, without derailing your plan for financial security.

You just lost your job

“Short-term, emergency savings are perfect for using when a need arises, but should really only be used in true emergencies such as a job loss,” said Jason Speciner, CFP at Financial Planning Fort Collins based in Fort Collins, Col. And while a week or two of “funemployment” may sound appealing at first, that hoard of pelts you collected in Red Dead Redemption 2 won’t go far with the landlord or your creditors.

Common sense dictates you should cut back whatever expenses you can while you’re in between jobs, but depending on how you lost your job, you may not have to rely completely on your savings to keep you afloat.

Collecting unemployment benefits

If you’ve recently lost your job, you may be eligible to collect unemployment benefits through the joint federal-state unemployment insurance program. The particulars of who can collect unemployment varies from state to state, but in general you must meet the following criteria:

  • You are unemployed through no fault of your own. (The exact definition of which depends on the state, but if you were perhaps fired for showing up to work inebriated, you shouldn’t count on collecting unemployment).
  • You worked a certain amount of time as required by the state to be eligible for unemployment, usually the first four out of the last five calendar quarters prior to the time you file for unemployment. In other words, you will have needed to be working full time for at least a year in most states.

You’ll have to apply for unemployment with your state’s unemployment insurance agency, either in person, over the phone or online. When you do so, make sure you have information such as the dates you worked for the employer, how many hours you worked, and other important details.

Check out this list of links to state unemployment insurance agencies, and also see MagnifyMoney’s detailed guide to filing for unemployment to help ensure you get all of the financial assistance to which you’re entitled.

You just got hit with a huge medical expense

Sometimes an illness or injury can take a greater toll on your financial health than on your body. A recent Kaiser Family Foundation poll found 67% of the country lists unexpected medical bills as their biggest worry when it comes to paying for healthcare, and given the thousands of dollars of debt you can rack up with even a single visit to the hospital, it’s easy to understand why.

“Life happens, and these types of expenses are why financial planners are always adamant about establishing an emergency fund,” said Rick Vazza, CFA at Driven Wealth Management in San Diego, Calif. “Without one, the cost would normally be covered by credit, and if the credit on a large expense can’t be paid off immediately, the interest charges can be significant.”

If your health insurance doesn’t cover enough of the costs to protect you from a bill you can’t afford (or you aren’t fortunate enough to have insurance in the first place), you still have some options before charging that medical bill to a credit card and potentially setting yourself up for years of debt.

How to knock down hospital bills

Getting a hefty bill from the hospital can be enough to send you in a panic, but you should avail yourself of every opportunity to lower the amount you owe before forking over a payment. In general you can:

  • Contact the hospital’s billing department and ask about its bill reduction or forgiveness policies — this will depend on the individual hospital, but depending on your income level and the particulares of your situation, you may qualify for a reduced bill.
  • Offer to pay the hospital in cash (or using a flexible spending account) — sometimes hospitals and other medical facilities will give you a discount if you’re willing to settle the bill right then and there.
  • Charge the bill to a 0% APR credit card — assuming you can qualify for one of these cards, it’s important to remember that the 0% interest only holds for a limited amount of time, so if you’re unable to pay off the money you charge to the card before the time is up, you’ll be stuck making interest payments.

Find out more by consulting our guide on how to get your hospital bill reduced and minimize the drain on your savings.

A major appliance breaks

You don’t want to get in the habit of leaning on your savings to purchase big-ticket items you could do without. But sometimes things fall apart, and if your furnace went on the fritz, you wouldn’t want to wait until your next paycheck to restore heat in your home. You could always charge the repair (or replacement) on a credit card, but make sure you’ll be able to pay off the balance by your next billing cycle if you want to avoid interest payments.

“A good rule of thumb is to dip into the emergency fund whenever the alternative would require carrying a credit card balance to pay for the irregular expense,” said Vazza.

Building a budget for repairs

One way to help soften the blow of dipping into your savings to replace a major appliance is by having a well-planned budget that includes money for such incidentals. Ditch your pen and paper, and try one the many budgeting apps available to help you track your money.

Making a budget means taking a long, hard look at how you spend and save money, which is why it’s often so unpleasant. To begin, you’ll need to determine a few facts such as:

  • How much money you take home every month.
  • How much you spend every month, both on necessities such as rent or mortgage, and luxuries like eating out, entertainment and shopping.
  • How much money you want to save monthly — not only for retirement and long-term financial goals, but also for incidentals such as major appliance repairs.

Learn more about how to use these apps and set up your first budget at MagnifyMoney’s ultimate guide to budgeting.

You need to seize a once-in-a-lifetime opportunity

Dipping into savings to seize an opportunity is more open to interpretation than the other items listed above — is it worth taking money out of your account to invest in your brother-in-law’s dating app idea? But at the end of the day this is your money (and your life), so only you can decide if an opportunity is worth spending the cash.

Consider taking a loan

Depending on the opportunity, you might find a personal loan from a bank can help you cover expenses along with dipping into your savings. Lenders (both traditional banks and online financial institutions) offer plenty of loans to help you out with the associated costs.

Of course, not even the most lenient lenders just hand out sums of money to anyone, and if you find one that does, you should run in the opposite direction — it’s probably a deal too good to be true. Some other things to keep in mind when applying for a loan are:

  • Your credit score, which sums up how big of a risk you are to lenders considering giving you a loan. The higher this score, the more dependable you look to lenders which gives you access to better loan terms such as lower interest payments.
  • The interest rate charged by lenders. This varies depending on the type of loan — personal loans, which usually aren’t backed by any sort of collateral, tend to charge higher interest rates.
  • Is there an origination fee? Some personal loans charge a fee based on a percentage of the total loan amount that must be paid upfront. For example, a $35,000 personal loan with an origination fee of 5% would mean you need to pay a $1,500 origination fee.

Read our guide to find out more about the ins and outs of navigating a personal loan.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here


Advertiser Disclosure

Strategies to Save

Five Easy DIY Repairs That Can Save You Money

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.


If you’ve always relied on your landlord or a contractor to fix things in your home, you may be tempted to just pull out your phone the next time something breaks. But as many seasoned homeowners will tell you, it’s not always worth dialing a professional — especially if you’re dealing with a simple fix that almost anyone (even you) can master.

Not only are contractors sometimes hard to book for smaller jobs, but their costs can add up quickly, experts say. “It’s often pretty expensive to have somebody come and fix something that you might be able to fix really easily with an inexpensive part,” said Don Vandervort, founder of the home improvement site

It can also be empowering to tackle a job yourself, says Danny Lipford, host of the home improvement show “Today’s Homeowner.”

Just be prepared for some surprises — especially if you’re a first-time fixer upper.

“Keep a sense of humor,” says Los Angeles resident John Morell. When Morell decided to install wood floors in his home, he underestimated just how tricky the job would be to finish. It took him twice the amount of time that he expected, and he made a number of mistakes. But he doesn’t regret trying, he says — “It came out great.”

5 easy DIY repairs

If you don’t have a lot of experience wielding power tools or taking things apart, try to stick with smaller projects and work your way up, Vandervort said.

There’s no shortage of relatively simple projects that you’ll likely be able to do yourself. Most will take just a fraction of the time it would take for you to call and then wait for a professional. For example, some projects that you could take on now before working your way up to bigger jobs include:

Fixing a leaking faucet

Cost to hire a professional: $200 or more, according to HomeWyse.
Cost to do it yourself: As little as $2.48 to $30 or more, depending on the parts you need.

This classic home repair project often just requires a screwdriver, pliers, a wrench and some basic know-how to complete. Before you call a plumber, look for some step-by-step instructions and try fixing the problem yourself. “Taking apart a bathtub or shower valve that’s defective or a kitchen sink that’s dripping or not working properly — those are some pretty easy repairs,” Vandervort said. “They usually involve taking the handle off and opening up the body of the valve and replacing a washer or a cartridge inside the valve.”

You may need to purchase some individual parts, like a new O-ring or a faucet repair kit, but there’s a good chance you won’t have to spend more than $5 to $20.

“It depends on the make of the faucet,” Vandervort said. However, a lot of common faucet parts are available at home improvement stores. Just make sure you bring the parts with you when you go to buy a replacement, he adds; that way, you don’t accidentally buy one that doesn’t fit. “That’s the case with parts of almost anything you’re fixing,” he says.

Rescuing a jammed up garbage disposal

Cost to hire a professional: $200 or more, according to HomeWyse
Cost to do it yourself: Potentially $0 if you held onto your disposal wrench; less than $5 if you need a new L-shaped wrench

According to Vandervort, a malfunctioning garbage disposal is another common household problem that’s often relatively easy to fix. Often, people don’t realize that reviving a locked garbage disposal can sometimes be as easy as pressing a reset button at the bottom of the disposal, he says.

You may also be able to unclog it with the help of the L-shaped hex wrench that came with your appliance. “You stick this hex wrench into the bottom hub, you crank it and it breaks free whatever you have in the garbage disposal,” Vandervort said.

Replacing broken or dated hardware

Cost to hire a professional: $65 to $200 or more, according to HomeWyse
Cost to do it yourself: $3 to $10 or more, depending on the part

These days, hardware parts are often so standardized that it’s relatively easy to find a replacement if you need one, says Lipford. Just make sure you carefully compare your old hardware to the new hardware that you’re considering purchasing, he says – especially if you’re trying to replace something that has a lot of parts that need to match, such as a cabinet hinge.

With the help of a screwdriver, you can swap out basic drawer knobs for something more stylish, or purchase new knobs for interior doors that aren’t closing properly.

“We had a few where the door would not latch,” said Stephanie Tilton, who runs the blog Dogwood DIY and has fixed up several houses. However, removing the old, defective doorknobs and replacing them with new ones was relatively simple, she says.

Working with hardware isn’t foolproof, though, so be careful. For example, New York City resident Ellen Sheng says her husband tried to fix a loose hinge on a bathroom cabinet by repositioning it and wound up botching the job so badly he later had to duct tape part of the cabinet. Now, she says it looks like Frankenstein. “I think he watched some YouTube videos and was like, ‘I’m just moving the hinge; how hard could it be?” Sheng said.

Repainting the interior or exterior of your home

Cost to hire a professional: $300 to $700 or more, depending on the job, according to HomeWyse.
Cost to do it yourself: Less than $50 for a smaller project.

One of the easiest, most cost-effective DIY repair jobs is to paint an area of your home that sorely needs a refresher, Lipford said. “There’s no better value that you can bring to something without almost no tools and limited skill than painting,” he said. “It could be painting your mailbox. It could be painting your front door, which is a significant return on your investment.”

You could even paint the sides of your home gradually over time, he says, rather than hire a painter to do it all at once.

Unlike other home improvement projects, painting is relatively low risk, Vandervort said. “You can easily correct any mistakes that you’ve made,” he said. “It’s not permanent and it gives you an opportunity to express your creativity and personality.”

Just be sure to follow some basic safety protocols before you pick up a brush, he says. For example, make sure you have a solid ladder and are comfortable using it if you plan to paint some hard to reach areas. Also be sure to test any paint from before 1978 for lead – especially if you plan to scrape the paint from older woodwork.

Fixing a drafty attic

Cost to hire a professional: $800 to $1,500 or more, according to HomeWyse
Cost to do it yourself: Around $145 to $500 or more, according to Home Advisor

Even repair jobs that seem big or intimidating can turn out to be relatively simple or rewarding. For example, Danny Lipford recommends adding insulation to your attic in order to save money on your next energy bill. “One of the least sexy home improvement projects you can do is putting insulation in your attic,” he said. But it can later make it much cheaper to heat and cool your home.

Installing insulation can come across as complicated, so you may be tempted to hire help rather than attempt it on your own. But if you have the time and energy, you can do it yourself, Lipford said.

You don’t necessarily need to do the whole attic at once, he adds. “You might just do one corner of the house,” he said. With every little bit that you do, “you immediately are getting money back.”

The bottom line

Tackling your own repair and home improvement projects can be a great way to save money and build your confidence as a homeowner. Starting out with small, low risk projects can also help give you the experience and foundation you need to move on to bigger jobs. “It gets you comfortable and more confident with using tools,” Vandervort said.

Just try not to get too overconfident right away. Some projects may seem like they’ll be easy, but they require far more skill and craftsmanship than you might realize, Lipford said. For example, you’ll find a number of YouTube videos and articles teaching you how to finish drywall. But even experts struggle to get the finish right.

“I’ve done drywall for 40 years,” he said. “I still can’t stand it. I still have problems with it all the time.”

There are also some projects that are just too dangerous to do yourself, such as fixing your home’s wiring, or are too risky to take on without the help of a professional. For example, if you attempt to sand your own wood floors, you could accidentally ruin them by sanding too far into the floor, Vandervort said. Similarly, a bad plumbing job can force you to go without water until it’s fixed.

“Avoid things where a high level of craftsmanship is important to the end result,” Vandervort said. “Craftmanship is something that becomes very visible in certain projects.”

If you’re not able to match an expert’s quality on something that’s highly visible, then you could come to regret trying to do it by yourself.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kelly Dilworth
Kelly Dilworth |

Kelly Dilworth is a writer at MagnifyMoney. You can email Kelly here