Best place to keep a rainy-day fund and an emergency fund

I know it is a good idea to keep an emergency fund in a liquid (or near-liquid) state in case of income loss. What would be a good, safe place to keep this money where it would at least grow more than if left in a savings account?

Rainy day fund

Your rainy day fund should contain $500 to $1,000. This will let you pay for things without having to throw smaller expenses on your credit card, or take out a payday loan.

In short, the money in this fund will get you through to your next paycheck.

Say you have a childcare emergency. Or your car stalls out and you need a new battery. Or your dishwasher starts spewing suds on the kitchen floor unexpectedly. You’re going to need a few hundred dollars that you can easily access. You need it, it’s there.

Your rainy day fund is liquid (meaning it’s cash). The best place for it is likely in a bank account, such as a savings account, where you can access the money quickly.

Once it’s spent, you can start saving again for the next time because well, life happens.

Emergency fund

An emergency fund is just that. When life throws you a major curveball, you have money to fall back on.

Your emergency fund should have enough money to cover your expenses for three to six months. You’ll use this money in the event of a more serious setback, such as a layoff or an illness that prevents you from working.

How much should be in this fund? That all depends on you, your fixed expenses, and what you’ll need to keep yourself going in a really tough time.

Is your monthly spending $2,000 or maybe $4,000? Whatever the amount for your monthly expenses is, multiply it by three or by six. That’s how much you should try to put away.

Your emergency fund will probably (hopefully) sit for a while so you may want to consider investing the money somewhere that you can quickly pull out without a loss if the need arises.

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Thanks for the clarification between a rainy day fund and an emergency fund, but my question is if anyone has any opinions as to where to keep the emergency fund for maximum interest while keeping in mind that it needs to be accessible at short notice.

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Hi @yoni i personal used a few apps the best one i love that is fee is qapital.com you can download it here: qapital.com

Its lets you do many different things to start saving money and different goals. you even get a debit card.

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Thanks :slightly_smiling_face:

Besides helping you save by giving you goals, is there any major benefit of keeping your money in there (like high interest)? I already save and invest using SoFi

What about investing in a Roth IRA if you don’t have one or don’t reach the contribution limits anyway?

The money you set aside for an emergency savings fund is still eligible to be withdrawn with no penalty and it’s the same amount of money you would have received just investing in a regular savings account. It’s the earnings that you are not allowed to withdraw, but even for that there are ways around it (first home or qualified education expenses)

You receive the benefits of being able to invest in stocks and if you don’t need the money then you will make a nice amount on the compounding over time.

Another idea is American Express personal savings which gives around 2.10% or 2.15% currently.

Interesting.

Did you ever consider a high cash Value policy?

You talking life insurance? Explain how that works as a rainy day fund or an emergency fund?