Emergency Fund: Why, How and Where to Keep It?

What Is an Emergency Fund?

Why Emergency Fund Is Important?

How Much Emergency Fund Should Have?

Where to Keep an Emergency Fund?

How to Save Money for an Emergency Fund?

How to Use an Emergency Fund?

FAQs About Emergency Fund

Is keeping an emergency fund worth it? up-arrow

If you are living without any safety, then you are living on the financial edge and might run into a crisis. But if you are prepared with emergency funds, it provides you with the confidence that you can tackle any unexpected moment of your life without worrying about money.

Where can I park my emergency fund instead of a bank? up-arrow

Instead of a bank, an emergency fund can be kept at:

  • Higher-yielding money market accounts
  • Credit unions
  • High-yield checking accounts
  • Peer-to-peer (P2P) lending services.

What is the difference between a rainy day fund and an emergency fund? up-arrow

A rainy day fund is usually smaller than an emergency fund and is most commonly used for unexpected, one-time, small amounts. While an emergency fund has comparatively more money involved in it and is being used for more emergency purposes like medical expenses, etc.