Why 3 Months Is the Minimum
Financial experts generally recommend 3 to 6 months of expenses in an emergency fund. For working people with variable hours or a single income, 6 months provides more stability. Start with $1,000 as your first goal, then build toward the full amount.
Where to Keep Your Emergency Fund
Your emergency fund should be in a savings account that is separate from your everyday checking account but accessible within a day or two if needed. High-yield savings accounts currently pay around 4 to 5 percent APY, which is far better than a traditional bank account. Fidelity's Cash Management Account currently pays 5.1% APY with no restrictions.
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See our full guide: The $1,000 Emergency Fund Challenge
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