What’s the Difference Between an Emergency Fund & Savings Account?

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I love the fact that so many people around me are striving to be financially fit and fabulous! Improving their credit scores, increasing their savings accounts, and becoming first time home buyers! In that spirit, a friend recently asked me what is the difference between an Emergency Fund and a Savings Account?  In this post, we will dissect emergency funds and savings accounts.

User Submitted Question: What's the difference between an emergency fund and saving account?

What is an Emergency Fund?

An emergency fund is 3-6 months of expenses set aside in the event of a job loss, car problems, a medical emergency, or other unexpected financial situations. An emergency fund should be kept in a liquid bank account like a savings account that is easy to access in the event of a financial emergency.  For more information regarding emergency funds check out 5 Reasons you Need an Emergency Fund and Steps to Starting an Emergency Fund.

What is a Savings Account?

A savings account is an account opened at a bank (brick and mortar or online) or other deposit institution which earns interest.  Cash kept in a savings account is typically less accessible than money kept in a checking account. In an effort to encourage saving, the Federal Reserve limits the number of withdrawals that can be taken from a savings account to six per month.


In essence, an emergency fund is just one type of savings account that is “earmarked” or reserved for financial emergencies.  To ensure your emergency fund is only used during financial emergencies, keep it separate from your general savings or checking account.  By keeping your emergency fund separate from your general savings, you can avoid dipping into your emergency fund for concert tickets or a cheap flight!


Do you have a savings account or an emergency fund?  Do you choose to keep them within one account or split them into separate accounts?

What's the Difference Between anEmergency Fund and a Savings Account-

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  1. Hey Tia,

    I have to keep those accounts totally separate. If not, it’s hard for me to identify what is actually set aside for an emergency, vacation, clothes, or whatever else I may be saving for. A matter of fact, I have several online savings accounts in addition to my emergency account. I like to think of them as savings buckets to help organize my savings more.

    1. It is awesome that you are working on an emergency fund! It can be very overwhelming but definitely a financial must have.

    1. I agree! I have to not look at a statement, or have it appear or online banking so it is out of sight and out of mind. I also prefer to have deposits to it make directly from my paycheck so that I have no reason to go NEAR it!

  2. I have both types of accounts although I’m working to replenish my emergency funds account. I find that the easiest way to save is to just have funds withdrawn automatically from my paycheck.

  3. I have a savings account, but not an emergency fund. However ,I do have stocks that give me the option to take the cash back out anytime. I guess I need to start working on an emergency fund.

  4. It is absolutely essential to have both a savings and emergency account. The challenge is not touching the money.

    1. Yes! It is tough to not touch the money; however, if you do have a financial emergency at least you have the resources!

  5. Ooh, I really didn’t know there was a difference. I have a savings of sorts but really need to work on having both of the above. Thanks for the tips!

  6. I have both of these accounts and am currently teaching my children the importance of savings and emergency funds. Anytime money is needed for an emergency I talk about the importance of having it.

    1. That is awesome that you are teaching your children the important of saving! Conditioning them at an early age to be financially responsible!

  7. My husband and I have an emergency fund of $10k which we keep in a basic savings account and a GIC laddering strategy. I think emergency funds are great and everyone should have something substantial saved up for a rainy day.

  8. Good post! I tend to set these up in a separate bank than our checking account. It’s harder for me to touch it and I end up forgetting about it as a spending option.

    1. Awesome idea! When it comes to money, out of sight out of mind works so well. That way you aren’t tempted to touch it.

  9. Most persons do not have an emergency fund because they think it is so hard to do. Very important to keep these two accounts separate as they represent two very different things.

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