Money·3 min read

Where to Put Your Emergency Savings

where to put emergency savings
August 14, 2019

The Story

Your emergency savings needs a safe house. Sitting in your checking account doesn’t cut it.

Why not?

Your checking account and emergency savings are like OJ and toothpaste. Better kept separate. If all your money’s in the same place, it’s too easy to use emergency savings for regular expenses instead of what it’s really there for: to bail you out when life goes wrong.

Give me a better option then.

Generally you’re looking for a safe spot where you can get to your money ASAP. Experts recommend putting your emergency savings in its own account that’s backed by the FDIC. That’s a special insurance from the federal gov that’ll pay you back up to $250K in case your bank fails or runs out of money. Using a bank also means you can earn some interest, which helps your money grow while you aren’t using it.

If I want to make my money grow, shouldn’t I invest it?

Trick question. Usually, yes. But for emergency savings, liquidity is more important than growth. Liquidity = a fancy word that refers to how fast and easily you can access your money – without sacrificing any value. Cash savings is as liquid as it gets. Stocks...not so much. If you need money on a day when the stock market’s down, you risk not having enough.

Savings it. What kind?

You’ve got a couple options.

  • High-yield savings account: not a regular savings account, a cool one...that pays you a lot more. As in, up to 25 times more than a traditional savings account. Online banks usually offer the best rates compared to OG brick-and-mortars, so shop around. Psst...high-yield savings accounts are usually experts’ top picks for where to park your savings.

  • Money market: like a hybrid checking and savings account. You can usually write checks or use a debit card to take money out, but there might be a limit to how many times per month you can do that. They usually come with higher minimum balance rules, too. Which doesn’t make money markets a good option if you’re building up your savings from scratch.

  • CD: stands for certificate of deposit. These also offer higher interest rates than traditional savings accounts. Also at a price. You agree to keep your money locked up until a certain date or else pay a penalty. Probably not ideal for an SOS situation, unless you split your savings between a CD and other savings account.


It’s not just how you save for emergencies. Pay attention to where you save, too. You have a few options. No matter what you decide, make sure you can get to your money quickly. So when life gives you lemons, you can actually afford to make lemonade.

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