Emergency Fund Calculator

Where should I keep my emergency fund?

High-yield savings accounts (HYSA) at online banks (Ally, Marcus, SoFi, Discover) currently offer 4.5–5.5% APY — far above traditional bank savings rates of 0.01–0.5%. Money market accounts at brokerages are another option. Keep your emergency fund liquid and FDIC-insured — do not invest it in stocks or bonds.

Should I build an emergency fund or pay off debt first?

Financial experts generally recommend a small starter emergency fund ($1,000–$2,000) first, then aggressive debt payoff (especially high-interest debt over 8%), then building the full emergency fund. The exception: if you have very high job security and a credit card with a large limit for true emergencies, some advisors prioritize debt payoff completely first.

What counts as an emergency?

True emergencies: job loss, major medical expense, car breakdown needed for work, critical home repair. Not emergencies: planned expenses (holidays, vacations, car registration), purchases you just didn't budget for, or investing opportunities. Using your emergency fund for non-emergencies defeats its purpose and leaves you exposed when a real crisis hits.

Should I use a Roth IRA as an emergency fund?

Roth IRA contributions (not earnings) can be withdrawn tax- and penalty-free at any time. Some use this as a dual-purpose emergency fund. Pros: higher returns than HYSA over time. Cons: you lose the tax-advantaged investment space permanently; investments could be down when you need the money; psychological — it's too easy to "raid" for non-emergencies.