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A car repair, a vet bill or a short gap between jobs. Without savings, each one lands on a credit card or a costly loan.
An emergency fund is money set aside only for surprises like these. Here is how to size yours with simple math, and where to keep it.
Key takeaways
- Size the fund on essential expenses, not on your income.
- A common rule of thumb is three to six months. One month is a strong first milestone.
- The best home for it is safe, separate and easy to reach, like a high-yield savings account.
- Rebuild it after every use. That is the habit that keeps you out of debt.
Where to keep it: savings accounts at a glance
| Account | Best for | Rate (APY) |
|---|---|---|
| Marcus Online Savings | Simple, high base rate | 3.50% · $0 fees |
| Ally Savings | Organizing with buckets | 3.00% · $0 monthly fee |
| SoFi Savings with Vaults | People with direct deposit | 3.30% with direct deposit |
Rates are variable, as of September 2026, from each bank’s official page.
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How to build your emergency fund, step by step
- Add up your essential monthly costs
- Pick your target: one, three or six months
- Open a separate high-yield savings account
- Automate a transfer every time you get paid
- Add windfalls
- Define what counts as an emergency
- Refill it after you use it
Step 1. Add up your essential monthly costs
List only what you must pay if income stopped: rent or mortgage, utilities, groceries, insurance, transportation, phone and minimum debt payments. Skip dining out and subscriptions you could pause.
Step 2. Pick your target: one, three or six months
Multiply your essential costs by the number of months. Use this simple emergency fund calculator:
| Your situation | Months to aim for | Example at $2,500/month |
|---|---|---|
| First milestone | 1 month | $2,500 |
| Steady paycheck | 3 months | $7,500 |
| Irregular or single income | 6 months | $15,000 |
Example only. Replace $2,500 with your own essential monthly costs.
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Step 3. Open a separate high-yield savings account
Keeping the fund apart from checking makes it harder to spend by accident. Choose an FDIC-insured bank: FDIC deposit insurance covers at least $250,000 per depositor at each insured bank. Options are compared in the tools section below.
Step 4. Automate a transfer every time you get paid
Set an automatic transfer for the day your paycheck lands. Start small if you must. A budget helps you find the amount, and our guide to budgeting apps that end the paycheck-to-paycheck cycle compares four.
Step 5. Add windfalls
Send part of a tax refund, bonus or side income straight to the fund. It shortens the timeline without squeezing your monthly budget.
Step 6. Define what counts as an emergency
Write it down: job loss, medical bills, urgent car or home repairs. Sales, trips and planned expenses don’t count. Plan those in separate savings.
Step 7. Refill it after you use it
Using the fund is the point. Afterwards, restart the automatic transfer until you are back at target.
Common mistakes
- Keeping the fund in checking, where it gets spent.
- Investing it in stocks, where it can drop right when you need it.
- Waiting to start until you can save a large amount.
- Using a small-dollar advance or a high-APR card instead of building a buffer. Our review of cash advance apps and their real costs explains why that gets expensive.
- Stopping at the target and never investing the rest. Once the fund is full, our guide on how to start investing with just $100 is a good next step.
Tools and offers that help
1. Marcus by Goldman Sachs Online Savings
- Rate: 3.50% APY as of September 23, 2026; variable.
- Cost: $0 fees and $0 minimum deposit. Maximum balance limits apply.
- Highest base rate of the three, with no conditions.
- Maximum balance limits apply, per Marcus.
2. Ally Bank Savings
- Rate: 3.00% APY as of September 22, 2026; variable, same rate on all balance tiers.
- Cost: $0 monthly maintenance fee and $0 minimum to open or earn the APY.
- Tools: savings buckets to label money, for example “emergency fund”, inside one account.
- Limit: Ally caps certain withdrawals and transfers at 10 per statement cycle.
- Buckets make the emergency fund visible.
- Lower rate than Marcus today.
3. SoFi Savings with Vaults
- Rate: 3.30% APY with eligible direct deposit or $5,000 in qualifying deposits every 31 days; 0.80% APY without, as of September 23, 2026.
- Cost: $0 account, service or maintenance fees; SoFi charges for some transfers, like outgoing wires.
- Vaults: separate goals inside your savings, such as an emergency fund, with automatic roundups.
- Checking and savings in one place.
- The rate drops sharply without direct deposit.
New to online banks? Our list of online banks and second-chance accounts covers more options.
Checklist: your emergency fund plan
- Total your essential monthly costs.
- Pick a target: one, three or six months.
- Open an FDIC-insured savings account separate from checking.
- Name it “Emergency fund” in the app.
- Automate a transfer for the day your paycheck lands.
- Send part of every windfall to it.
- Refill it after each use.
How we compared
- Checked: every rate and fee on September 23, 2026, on each bank’s official page or rate sheet (Ally’s page is dated September 22, 2026).
- Order: no ranking. Accounts appear from the highest unconditional rate down, and each fits a different profile.
- Criteria: APY, conditions to earn it, fees, access to money and tools for goals.
- Scope: US accounts. Canadian readers should see our Canada guides.
- Independence: no bank paid for placement.
FAQ
How do I use an emergency fund calculator?
Add up your essential monthly costs, then multiply by the months you want covered: one to start, three for a steady income, six or more for irregular income.
What is the definition of an emergency fund?
It is cash set aside only for unexpected, necessary costs, like a job loss, medical bill or urgent repair.
Where should I keep my emergency fund?
In an FDIC-insured high-yield savings account, separate from checking. It earns interest and stays available.
Should I save an emergency fund or pay off debt first?
Many people do both: a small starter fund first, then extra payments on high-interest debt. Without a buffer, the next surprise often goes back on a card.
Can I build an emergency fund with bad credit?
Yes. Savings accounts don’t depend on your credit score. Building one can also protect your score, as our guide to reaching an 800 credit score explains.
For the full picture, see our hub Best Savings & Checking Accounts 2026 (US), the best high-yield savings accounts of 2026 and the best checking accounts and bank bonuses right now.
Sources
- FDIC — Deposit insurance
- Marcus by Goldman Sachs — Online Savings Account
- Ally Bank — Savings account rates
- Ally Bank — Online Savings Account
- SoFi — Banking rate sheet
- SoFi — Savings account and Vaults
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