How To Keep Your Emergency Fund Safe, Accessible and Away From Temptation

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Keeping extra money around in cash is always a good idea — but it depends on where you keep it.

See: How To Build Your Emergency Fund When Living Paycheck to Paycheck
Find: 10 Easy Ways To Save $400 Every Month

The old under-the-mattress strategy is never a good idea and with the ease of modern-day banking, a traditional savings account might not be as well.

Banking apps can see your hard-earned savings transferred into an active checking account with a few swipes, and the money used for things other than you intended. A traditional savings account can be useful for things like saving for a home, travel or college savings, all of which can ebb and flow with changing goals and circumstances.

One thing that should never be touched though is a true emergency fund, the kind of money you will need if, let’s say, a global pandemic all of a sudden upends world order as you know it and you need sustained cash.

A good answer is a high-yield savings account. Its biggest benefit — a higher interest rate than a traditional savings account — is not the only reason opening one up is a good idea. High-yield savings accounts are the only accounts of their kind where money is almost as liquid as a regular savings account, but more restricted. It usually takes one or two days to process a request for transfer from a high-yield savings account, meaning if you want to take out money to purchase something impulsively you will have the time to think twice.

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See: The (Minimum) Emergency Savings Needed in Every State
Find: 15 Smart Savings Tips You Can Start Today

CDs are also a good option, but depending on the institution, might have longer processing times. High-yield savings accounts have become so ubiquitous that they are accessible, safe and a great way to build up emergency funds that are also almost as liquid as cold hard cash. Not to mention, with prices seemingly going nowhere but up, it’s the best bet to make sure your money isn’t losing its value day after day.

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 
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