This post, “What you need to know about emergency funds and savings accounts” is sponsored and we may receive a commission, at no cost to you, if you choose to use the services discussed in this message. And while this post is sponsored, we’ve been CIT bank customers for a number of years.
Back in 2009 when we started making a cash only budget, we knew we needed to establish an emergency fund…for non-budgeted emergencies. (Are real emergencies ever budgeted?) It started us on a secondary learning path to figure out everything we need to know about emergency funds and savings accounts.
If there’s one thing I’ve learned in life, it’s that if one person has a question, somebody else does too. So hopefully this helps and also urges you to set up a Savings Connect account for your emergency fund.
What is an emergency fund?
To start on your budgeting journey, you will have a starter emergency fund of $1000. Some people might have access to $1000 immediately and be able to set it aside (keep reading) and others will have to work towards getting that $1000.
There is no right or wrong way. The goal is to get $1000 as quickly as possible for any emergency you might have.
Eventually, when you have all debt paid off, your emergency fund grows and becomes 2-3 times your monthly expenses.
How can you get your $1000 for your emergency fund?
Maybe you have some debt and other things, but you also have $1000 in your bank account. Possibly, you bought some stocks and can take out $1000. Do you have a coin jar in your kitchen that collects money? Look around your house and see what you aren’t using that you can sell. Put it on mercari or poshmark. List things on facebook marketplace or even have a garage sale.
With some dedication and time devoted, you will be surprised how quickly you can gather $1000 for your emergency fund.
What IS an emergency?
This can vary a lot. It’s really something that happens outside of your budget.
(FYI: A budget is where you tell your money it will be going, not where you log where your money went!).
Now, an emergency is not a new pair of shoes or the latest video game. It’s not a new car or a bigger house.
An emergency is the stitches your kid needs and required payment to leave urgent care. An emergency is a flat tire needing repair on the way home from work.
If, and only if, you can’t make adjustments to your budget to cover the emergency , then you use your emergency fund.
Then, as soon as possible, you replenish those funds and get your emergency fund back up to the $1000, or 3-6 months of expenses if all your debts are paid.
Where to store your emergency fund?
Under your mattress is not an option!
We prefer to keep our emergency fund in an account separate from our main checking / bank account.
By keeping this money in a separate account, it removes the temptation to easily spend the money. Additionally, since this is your emergency fund and you hope to never have to spend it, it’s ideal to keep it in a higher interest account with little to no fees or balance requirements.
A great place to keep your emergency fund is CIT Bank’s savings account.
CIT Bank’s products are perfect for preparing for unexpected emergencies, growing funds for a down-payment on a dream home, saving up for a loved one’s future, or anything in between.
You can do this with CIT Bank’s Savings Connect. This is their bundled savings/checking product that offers customers the ability to earn a competitive high yield savings rate accompanied with access and convenient features of an eChecking account. So while your accounts are at the same bank, the emergency fund is in a separate account.
Currently, account holders can earn up to 0.50% APY1 on Savings Connect and 0.25% APY2 on eChecking. Savings Connect is a tiered interest rate account dependent on the account holder also opening a linked qualifying eChecking account.
There is no opening or monthly fees on either product, but there is a minimum of $100 for both the Savings Connect and eChecking to open ($200 total).
What we did is kept our local bank account and also opened accounts at CIT Bank. It’s incredibly easy to set up transfers from our local bank and set up the accounts online. We are very happy with our interest rates and ease of use with CIT Bank.
Do you have an emergency fund?
If you haven’t set up an emergency fund yet, what is stopping you? Are you ready to take on any debt head-on and get your accounts and financial affairs in order?
Mr. Serious and I love talking all things emergency fund and living debt-free and would be so happy to help with any other questions you might have.
1Annual Percentage Yields (APYs) are accurate as of July 12, 2021 and are variable and may change without notice. The minimum to open a Savings Connect account is $100. Fees could reduce earnings on the account. Savings Connect is a tiered interest rate account that offers a higher interest rate to customers with a linked Qualifying eChecking account to which periodic Qualifying Deposits are made. Base Tier APY is 0.42% for accounts without a monthly Qualifying Deposit to linked eChecking Account. Upper Tier APY is 0.50% for accounts with a monthly Qualifying Deposit to the linked eChecking Account.
2Annual Percentage Yields (APY) are effective as of July 12, 2021. 0.10% APY for balances less than $25,000. 0.25% APY for balances of $25,000 or more. Fees may reduce earnings. Checking APYs and interest rates are variable and may change at any time without prior notice, including after account opening. The minimum opening deposit for eChecking is $100. See Fee Schedule and Agreement for Personal Accounts for details.