Budgeting Basics
Lesson 2 of 42 min50 XP
Budgeting Basics
Emergency funds: the unsexy thing that makes everything else possible
3–6 months of essential expenses, in cash. The difference between a setback and a spiral.
Last reviewed: · Reviewed by the Money Scale editorial team
Job loss, car repair, medical bill, broken laptop. Without cash, those go on a 22% APR credit card and the math gets ugly fast.
3–6 months
Of essential expenses
Closer to 3 if your job is stable; closer to 6 if income is variable or you have dependents.
Where to keep it
- •A high-yield savings account (HYSA) at an online bank — currently ~4–5% APY.
- •Same FDIC insurance as your checking account, but actually pays interest.
- •NOT in stocks. It needs to be there the day you reach for it.
Key idea
Automate $50–$300/month into the HYSA the day you get paid. You won't miss what you never see.
Takeaway
Open a HYSA today. Auto-transfer something every payday until you hit 3 months of essentials.
Quick check · 50 XP
Where should an emergency fund live?