Emergency fund

Emergencies—from a broken bone to a layoff—are a fact of life. When you're faced with life's unexpected events, you can be ready.

What are emergency funds for?

An emergency fund is a stash of money set aside to cover the financial surprises life throws your way. These unexpected events can be stressful and costly.

Here are some of the top emergencies people face:

  • Job loss.
  • Medical or dental emergency.
  • Unexpected home repairs.
  • Car troubles.
  • Unplanned travel expenses.

3 benefits of having emergency money

Aside from financial stability, there are other pros to having an emergency reserve of cash.

It helps keep your stress level down.

It's no surprise that when life presents an emergency, it threatens your financial well-being and causes stress. If you're living without a safety net, you're living on the "financial" edge—hoping to get by without running into a crisis.

Being prepared with an emergency fund gives you confidence that you can tackle any of life's unexpected events without adding money worries to your list.

It keeps you from spending on a whim.

You've heard the saying "out of sight, out of mind." That's the best way to store your emergency money. If the cash is only as far away as your closest debit card, you may be tempted to use it for something frivolous like a designer cocktail dress or big-screen TV—not exactly an emergency.

Keeping the money out of your immediate reach means you can't spend it on a whim, no matter how much you'd like to.

And by putting it in a separate account, you'll know exactly how much you have—and how much you may still need to save.

It keeps you from making bad financial decisions.

There may be other ways you can quickly access cash, like borrowing, but at what cost? Interest, fees, and penalties are just some of the drawbacks.

Ready to get started?

Ready to get started?

Get the basics on emergency funds

We're here to help. Talk with one of our investment specialists

Call 800-891-5355
Monday through Friday 8 a.m. to 8 p.m.

We're here to help. Talk with one of our investment specialists

Call 800-891-5355
Monday through Friday 8 a.m. to 8 p.m.

Have questions?

Here are the answers to some top questions about emergency funds.

In a nutshell, you should have at least 3 to 6 months' worth of expenses—but the exact amount depends on a few variables.

Figure out the right emergency fund amount

Because your overall financial picture has many moving parts, it's important to see how your emergency fund fits in with the rest of your priorities.

Find out how to juggle multiple financial goals

Money market funds can be a great place to hold your emergency savings because they're safe and accessible.

Find out where to put your emergency fund

All investing is subject to risk, including the possible loss of the money you invest.