Difference Between Savings Account and Emergency Fund, According to Financial Activist Dasha Kennedy
Written by
Vance Cariaga
Edited by
Ashley Barnett
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Most Americans have different bank accounts to serve different needs, from basic checking accounts for daily transactions to certificates of deposit for long-term savings. If you have multiple savings accounts, at least one should be devoted to an emergency fund. In fact, money blogger and influencer Dasha Kennedy says you shouldn’t consider a savings account and emergency fund the same thing.
In a recent Instagram post, Kennedy referred to savings accounts and emergency funds as “cousins, not twins.” The self-proclaimed “financial activist” also laid out some of the main differences between savings accounts and emergency funds:
Savings Account
In her post, Kennedy wrote that a savings account is “ideal for planned expenses and achieving short- to medium-term financial goals.” She also called a savings account “perfect for setting aside money for specific future purchases or experiences.”
Example: If you’re planning to buy a new laptop next year, use money from your regular savings account.
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Emergency Fund
This fund is “strictly for unexpected, urgent expenses that you can’t cover with your regular income or other savings,” Kennedy wrote, adding that the fund should serve as a “financial safety net for emergencies.”
Example: If your car breaks down unexpectedly and requires immediate repairs, dip into your emergency fund to pay for it.
Which Expenditures Warrant Savings vs. Emergency?
Here are some other guidelines Kennedy shared in terms of which expenditures should come out of which account:
| Scenario | Savings Account | Emergency Fund |
| Planning a vacation |  |
|
| Sudden job loss |  |
|
| Buying holiday gifts |  |
|
| Saving for a new phone |  |
|
| Medical emergency |  |
|
| Buying concert tickets |  |
|
| Unexpected home repairs |  |
|
| Sudden legal expense |  |
|
| Planning for a baby shower |  |
|
| Unexpected travel expenses |  |
The amount of money you should keep in your emergency fund depends on different factors, most having to do with your location, household size, income, and monthly expenses. As a general rule, you should aim to save enough money to cover at least three to six months’ worth of expenses. A good place to build an emergency fund is in a high-yield savings account that can help you grow your balance faster.
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