If you have a full emergency fund, it’s likely stacked with around three to six months of expenses.
If you find yourself in a situation where you’re not sure if you should spend your emergency fund or you’re struggling not to splurge it on non-essential expenses, ask yourself these questions. But first…
A lot of financial topics are full of jargon, but an emergency fund is exactly what it sounds like.
An emergency fund is cash reserved for emergencies, such as job loss, medical leave or any expenses that were entirely unexpected. Think of situations like your car breaks down, your basement floods or your pet swallows a sock.
We get the temptation to spend an emergency fund on … non-emergencies. If that cash is burning a hole in your pocket, ask yourself these questions before you spend that hard-saved cash.
Are you thinking of spending your emergency fund on something you want, or on expenses you have to pay?
For example, are you considering spending your funds on a spur-of-the-moment vacation you just got invited to? Or did you get a smaller check than usual and the rent is due?
Situations where it makes sense to use your emergency fund often include:
If it’s a problem that can be solved in a few weeks instead of immediately, you may be able to budget for it rather than spending your emergency fund.
For example, let’s say your TV broke. It’s a major bummer, but it’s not exactly an emergency that needs to be solved tomorrow. There’s a good chance you can save up some cash in a few weeks to purchase another TV, or head to a second-hand shop to get a cheaper used one if you really want a TV.
Examples of urgent emergencies include:
Emergency funds are a luxury that not everyone has the privilege of saving for. If you have the income to build an emergency fund, don’t take that for granted.
Before you spend that cash on a whim, remember how long it took you to build it up in the first place. Did it take a few months? A few years? A decade?
The latest wage index from the Social Security Administration was $66,621 in 2023. If you make around that much each year, your emergency fund is easily around $10,000 to $15,000, depending on your expenses.(1)
To recoup a $10,000 emergency fund, it would take:
Remember the hard work and dedication it took not to spend that cash in the first place. If there is a real emergency later on, future you will thank you.
That’s entirely up to you and your expenses.
Most experts agree that a “true” emergency fund should have enough funds to cover at least three to six months of income. The idea is that your emergency fund should be able to cover expenses for a few months, so you don’t rack up debt when you’re financially struggling.
If you’re withdrawing from your emergency fund frequently, such as once or twice a month, there might be other money issues to address.
Narrow down top savings accounts by monthly fees, APYs and perks. For a closer comparison, tick the Compare box on multiple options to see features side by side.
We currently don't have that product, but here are others to consider:
How we picked theseThe Finder Score crunches over 250 savings accounts from hundreds of financial institutions. It takes into account the product's interest rate, fees, opening deposit and features - this gives you a simple score out of 10.
To provide a Score, Finder’s banking experts analyze hundreds of savings accounts against FDIC-reported national averages as a baseline. Accounts with rates well over the national average are scored the highest, while accounts with rates well below are scored low.
Emergency funds are designed for emergencies, not shopping sprees, a new TV or non-essential home improvements. It’s hard not to spend savings that seem like its just sitting around, but an emergency fund can help avoid future headaches if something does go wrong.
Of course, we always hope that nothing goes wrong, but car troubles, family emergencies and job changes do crop up, and luck favors the prepared.
Compare top savings accounts to store your emergency fund and grow it passively.
Opening a top joint high-yield savings account (HYSA) can help you earn a higher APY, but make sure you’re on the same page about your goals.
Earn up to 8% with BCU Powerplus Checking and close to 7% with other accounts from Greenlight, Netspend, Varo, Uphold and more.
Earn up to 6% with Greenlight, 5% with Varo and just under 5% with Barclays, Western Alliance, Uphold, Wealthfront and more.
The DCU Primary Savings Account has a tempting rate, but it may not apply to your entire balance.
SoFi’s high-yield savings account is a hybrid checking and savings account featuring a high APY, cashback rewards and minimal fees.
SoFi, Discover, Wealthfront, Varo, Uphold, Bask Bank, Current, Marcus and Ally offer top vacation savings accounts with high APYs.
If you struggle to save, you could benefit from a savings account or CD that won’t allow you to withdraw funds.
Uninterrupted compound interest accounts pay interest on your initial balance and the interest you continually earn if you don’t withdraw.
Compare the six best savings accounts in the market, such as Netspend, Pibank and Bread.
Compare some of the best high-yield savings accounts available.