Emergency Fund Setup Checklist

Emergency Fund Setup Checklist

• Calculate 3–6 months of essential expenses (rent, utilities, food, insurance, minimum debt)

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  Use actual spending, not income. More stable job = 3 months; variable = 6.
• Open a high-yield savings account (separate from checking)

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  Ally, Marcus, Capital One. 4–5% APY vs. 0.1% at big banks.
• Set up automatic transfer from paycheck or checking

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  Even $50–100 per pay period. Consistency beats amount.
• Keep the fund in cash or cash equivalents (no stocks)

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  FDIC-insured. No volatility. You need it when markets crash and job is at risk.
• Don't raid it for vacations or discretionary spending

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  Only use for true emergencies: job loss, medical, major car repair.
• Replenish after any withdrawal as soon as possible

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  Treat it like refilling a fire extinguisher.
• Reassess target if life changes (marriage, kids, new mortgage)

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  More obligations = larger fund. Adjust annually.
• Consider a tiered approach: 1 month local, rest in higher-yield

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  Quick access for immediate needs; rest can earn more.
• Once fully funded, redirect automatic transfers to investments

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  Emergency fund first, then invest. Don't keep excess in 0% checking.
• Review annually—expenses change, income changes

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  Raise got you more expenses? Bump the target.