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Emergency Funds: Why You Need One and How to Build It

Conor Keenan Author Bio By: Conor Keenan  Last updated on February 18, 2024
Conor Keenan is's co-founder. His work in personal finance has been featured by MSN, CNN, AOL, Fox News, Yahoo News & many more.

Editorial Freedom: The opinions, reviews, or recommendations expressed in any article by our editorial team are not endorsed by any financial institution or partner. Our editorial team's content is not provided or commissioned by any financial institution or our partners herein.

An emergency fund is a financial safety net designed to cover unexpected expenses or financial emergencies. Whether it’s a sudden medical bill, urgent car repairs, or an unforeseen job loss, having an emergency fund can significantly reduce stress and financial strain during challenging times.

Why You Need an Emergency Fund

Unexpected expenses can arise at any time, and without a financial cushion, you may find yourself facing difficult decisions. An emergency fund provides a buffer that can help you manage these situations without derailing your finances. It also offers peace of mind, knowing that you’re prepared for life’s uncertainties. Additionally, relying on credit cards or loans in emergencies can lead to a cycle of debt, especially with high-interest rates adding to your financial burden.

How Much Should You Save?

A common guideline is to save enough to cover 3-6 months of living expenses. However, this can vary based on individual circumstances such as age, job security, health conditions, and whether you have dependents. Assess your situation to determine the right target for you

How to Build an Emergency Fund

  1. Set a Savings Goal: Start by calculating your monthly living expenses to set a realistic savings goal. Knowing what you’re aiming for makes the process more manageable.
  2. Create a Budget: Look at your income and expenses to see where you can cut back. Even small savings can add up over time and contribute to your emergency fund.
  3. Choose the Right Savings Account: Opt for a high-yield savings account or a money market account where your money can grow but remains accessible without penalties.
  4. Automate Your Savings: Setting up automatic transfers from your checking account to your emergency fund can simplify the saving process. Even a small, regular contribution can build up over time.
  5. Monitor and Adjust: Regularly review your emergency fund and financial situation. If your expenses increase or you reach your savings goal, adjust your contributions accordingly.

Tips for Accelerating Your Emergency Fund

  • Cut Unnecessary Expenses: Evaluate your spending habits and cut back on non-essential items. Consider dining out less, canceling unused subscriptions, or shopping more frugally.
  • Increase Income: Look for opportunities to earn extra money, such as taking on freelance work, selling unused items, or exploring a side hustle.
  • Windfalls: Use any unexpected money, like tax refunds, work bonuses, or monetary gifts, to boost your emergency fund.
  • Open a New Account: Most savings accounts from big banks only offer 0.01% APY. See much higher offers on our recommended high yield savings page or check out checking accounts that offer a bonus page and use that bonus as the seed for your emergency fund.


Starting and growing an emergency fund is one of the most important steps you can take towards financial stability. It may take time and discipline, but the peace of mind and financial security it provides are invaluable. Begin today, and set yourself on a path to a more secure financial future.

See our recommendations for your emergency fund.

Best Savings Accounts According To CompareAccounts™

Discover Bank Logo

4.15% APY

on balances under $100,000


On Discover Bank's Secure Site,
Member FDIC

Best For: Online Banking Experience + Customer Service

Discover Bank offers 4.15% APY on balances under $100,000 with a $2,500 initial deposit on their money market account.

Earn a high interest rate with this account while still being able to access your cash via debit, checks or from over 60,000 fee-free ATMs nationwide.

Discover Bank is one of the first online focused banks to offer no monthly fees and what they call "No. Fees. Period."

This means you won't pay fees for things like monthly maintenance, standard checks, a replacement debit card, excessive withdrawals and more.

Deposits are insured through the FDIC for up to $250,000 per depositor and if your balance is more than $100,000 than you'll earn 4.20% APY.

If you have any questions Discover offers 100% U.S.-based Customer Service Available 24/7.

Maintain growth with a high APY and enjoy easy access to your funds when you open your money market account today.

See Discover Bank's Secure Site For More Details.

4.50% APY


On U.S. Bank National Association's
Secure Site, Member FDIC

Best For: Branch Access

U.S. Bank offers new Elite Money Market Account clients up to 4.50% APY with a $25,000 deposit. 

A minimum $100 initial deposit is required to open the account.

U.S. Bank has over 2,000 branch locations in more than half of U.S. states.

Deposits are insured through the FDIC for up to $250,000 per depositor and if you have any questions U.S. Bank offers "24-Hour Banking" meaning a customer service representative is available 24/7.

In order to earn the 4.50% APY, you must have a balance of $25,000 or more. If you're planning on depositing less than $25,000, we recommend choosing a different account.

Avoid maintence fees with an average daily balance of $10,000 or more.

See U.S. Bank's Secure Site For More Details.

 High APY 

Customers Bank Powered By Raisin

5.32% APY


On Raisin's Secure Site
for Customers Bank, FDIC Insured

Best For: High APY + No Monthly Fees

Customers Bank high yield savings account offers 5.32% APY exclusively through the Raisin Platform.

This APY is much higher than what you’ll find at almost all "traditional" banks and even most online banks.

In addition to this high APY, Customers Bank offers $0 monthly maintenance fees, unlimited withdrawals, and is insured by the FDIC for up to $250,000 per depositor.

These features plus the sky high APY make this account a rare offer.

Founded in 2009, Customers Bank is a super-community bank with over $22 billion in assets.

Ranked by total assets, Customers Bank is in the top 5% of all banks in America and is consistently ranked as one of the best banks in America by Forbes.

See Raisin's Secure Site for Customers Bank For More Details.


Cit Bank Logo

4.65% APY


On CIT Bank's Secure Site,
Member FDIC


Best For: High APY Interest Rates + Mobile App

CIT Bank has been helping customers for over 100 years. Founded in 1908, CIT Bank is now part of First Citizens BancShares, Inc.

They currently offer 4.65% APY on their high yield savings connect account with no monthly fees.

CIT Bank’s mobile app give you 24/7 access to your savings account. It also lets you deposit checks remotely & make transfers easily. The mobile app is available for both IOS & Andriod devices.

You can open a CIT Bank savings connect account with as little as $100 and it only takes about 5 minutes to complete the sign-up process.

Deposits are insured through the FDIC for up to $250,000 per depositor and interest compounds daily.

See CIT Bank's Secure Site For More Details.

*National Savings Rate Average as published by FDIC