Chapter 5: Saving Money
Where you keep your Emergency Fund is almost as important as having one in the first place. This isn’t just another savings pot — it’s your financial safety net, the money that’s there to protect you when life throws a curveball. Because of that, the account you choose needs to strike a careful balance between safety, accessibility, and separation from your everyday spending money.
The most important thing is that your Emergency Fund should always be secure. This means keeping it in a bank account that’s backed by a reputable financial institution and insured by the appropriate government program. You don’t want to risk it in investments that could lose value, because when you need your Emergency Fund, you need to know the full amount will be there waiting.
It should also be accessible, but not too accessible. If it’s sitting in the same account as your checking or day-to-day spending money, it’s far too easy to dip into it for things that aren’t true emergencies — like a last-minute trip, a sale at your favourite store, or a home upgrade that could wait. By keeping it separate, you reduce temptation and make it clear that this money is for genuine emergencies only.
For many people, this means opening a dedicated savings account. Most banks allow you to set up additional accounts for free through their mobile app or website, and you can rename the account to something clear like “Emergency Fund” instead of leaving it as a random account number. That label alone can be a powerful reminder not to touch it unless you really need to.
Some people take it a step further by keeping their Emergency Fund at a completely different bank from their regular accounts. This can add an extra layer of separation and reduce the urge to spend it impulsively. It also gives you the chance to shop around for better account features, such as higher interest rates or more flexible access rules.
Once you’ve committed to keeping your Emergency Fund safe and separate, the next step is deciding which type of account will work best for you.
Choosing the Right Account
A regular savings account will keep your money safe and accessible, but typically offers little to no interest. A high-interest savings account (HISA) or high-yield savings account (HYSA) will also keep your money safe while allowing it to earn more interest over time. Since your Emergency Fund may hold thousands of dollars, letting it grow even a little while it sits untouched can make a difference.
No matter where you choose to keep your Emergency Fund, consider:
Reputation of the Bank
Make sure the bank is regulated and reputable. In Canada, check for OSFI regulation; in the US, FDIC insurance; in the UK, FCA regulation.Promotional Rates
Some banks offer high interest rates for a limited time to attract new customers, then drop them. Read the fine print before signing up.Withdrawal Rules
Look for accounts with instant access. Some savings products limit the number of withdrawals per month or lock your money for a set period, which can make it harder to get your funds in a real emergency.Deposit Insurance
Ensure the bank is covered by a deposit insurance program so your money is protected if the bank closes unexpectedly.Account Fees
Some accounts are free, others charge monthly or annual fees. Make sure any fees don’t outweigh the benefits.Minimum and Maximum Balances
Some accounts require a minimum deposit to open or have a maximum limit. Be sure these rules fit your situation.
The Bottom Line
The ideal place for your Emergency Fund is a secure, low-risk account that you can access quickly when you truly need it — but that’s not so convenient you’ll be tempted to spend it on non-emergencies. For most people, a high-interest savings account (separate from their main bank) is the perfect balance of safety, growth, and accessibility.
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