Saving To Rebuild Our Emergency Fund

Source: Flikr

Source: Flickr

With the new year, hubby and I really have to ramp up our emergency savings. We had a small savings set aside before baby girl was born but I was put off work six weeks earlier than we were expecting due to some pregnancy complications. It was stressful to say the least but I was physically unable to do my job anymore so I didn’t have a choice, sucking it up for the reminder wasn’t even an option.

Since we’re experimenting with a cash budget we toyed with the idea of withdrawing the cash for our savings as well and set the money aside each week, especially since I wanted to try the 52 week savings challenge that is floating around the web.

I quickly saw the flaws in this money management and decided it probably wouldn’t be a smart idea to have cold hard cash floating around our home. What if we had a fire? What if something happened to us outside of the home and we couldn’t get to it? Needless to say, using a savings account to save our money makes much more sense.

We’re in the process of deciding what type of account to use since there are so many options. We also need to decide to use our normal bank or an online type of account where the money wouldn’t be as easily accessible, either way our money will be much more secure in a bank account than under our mattress!

When I was reading Gail’s book she has a rule that states ”if you’d pick it up off the ground then it’s worth it” I’m paraphrasing, but her point remains that people often pass up on opportunities…like gaining interest in a savings account for emergency funds…I could say, I’d only gain like $30.00 a year in interest (or whatever) so I’m not going to bother, since it’s only $30.00; but if I saw $30.00 laying on the ground you better believe I’d pick it up so why wouldn’t I put my money into a savings account where I can gain interest, even if it’s $5.00 a year, I’d pick any amount off the ground so I’ll take it!

For people who have emergency funds established, what type of account are they in? Who else loves the ‘pick it up off the ground’ rule?


  1. Seeing as the interest rates are so terrible in the US I would look at an online bank account that gives you better interest rates.
    Glen @ Monster Piggy Bank recently posted..How Much Does it Cost to Have a Baby?My Profile

  2. I have a 3% savings account. Not a fan of having cash around the house, especially here, where I have no windows and anyone could open the mosquito net and get in!
    Pauline recently posted..Trading currencies as an additional source of incomeMy Profile

  3. Our EF is currently just sitting in a regular account… by having a minimum $3K balance, we’re saving $13.00 worth of bank fees every month. There is NO account on this earth that would give me $13.00 worth of interest each month, so this works for us.
    Carla recently posted..Gluten Free Pumpkin Bread Recipe…My Profile

  4. Our emergency fund is in my online savings account. It doesn’t make much interest, but I’d be too nervous to keep money in the house.
    KK @ Student Debt Survivor recently posted..Reformed Extreme CouponerMy Profile

  5. I love that quote-if you’d pick it up, it’s worth it!
    L Bee and the Money Tree recently posted..House Guest Rules: Who Pays for Dinner?My Profile

  6. That’s very understandable. Whether you’re using a savings account, an IRA, or even a CD to hold your money, at least you’re still making extra money, no matter the amount. Hopefully more consumers will see the value in “free” money from these accounts. If nothing else, bank your money in an interest checking account. Get some return on your money.

  7. We keep ours in sort of two locations. We don’t have a huge emergency fund relative to our spending, but in absolute dollars it is a respectable size. Currently, most of it is in our main bank account, to stay above the minimum and have free services. We keep a healthy buffer in there, because if we ever had to pay the $30/month, we’d be really upset with ourselves! We also keep a bit more in a HISA at ING, but the amount in that one varies, depending on our current savings targets. For example, we have to pay back my in-laws a portion of money this year, so we’ll shortly start transferring money to ING and hold it there until we have the amount we need.
    Anne @ Unique Gifter recently posted..Cheque Mate! Wedding Check Writing TipsMy Profile

  8. We have $2k in a savings account at our Credit Union and another $2K in ING. Other than that, the rest of what would be considered an emergency fund is in our Taxable account at Vanguard. I would much rather have my money working for me than have it simply errode due to inflation.

  9. I didn’t like using an online bank (ING) for my savings. I can see how the transfer delay is an advantage to some but it’s a pretty serious disadvantage when you actually do really need the money. See, it’s called an emergency fund because it is for emergencies. So, when an emergency does come up (say, car repairs) and you truly need that money immediately, waiting 4 days can be a painful inconvenience (trust me!).

    However, I suppose it also depends how much you keep in your checking. If you keep enough in checking to cover you during the transfer delay, it might not be such a bother (I keep my checking at the bare minimum).
    leslie recently posted..January Reads Recap: The Prestige, True Grit, Oliver Sacks & The BrainMy Profile

  10. I love that “pick it up off the ground” mentality! I’d never heard of that, but it explains the frugal mentality so well!

    We keep our emergency fund in a money market savings account. We made a little over a $100 in interest in 2012 from it, but then there’s the lovely capital gains tax that we get to pay on that interest.

  11. We used to keep our emergency fund in an ING account, but we found that having more than one bank account was too cumbersome for us. Yes, you read that right – between the hubby and I, we have ONE bank account. In that account goes all our money and I manage it with an Excel spreadsheet, so I know where every last penny is allocated to. It works for us, but I can totally understand how it’s not everyone’s cup of tea. (I’ll add that it also took us YEARS to finally get to this point – when we first married, we had multiple accounts all over the place. What a mess!)

    We also avoid paying overdraft fees and monthly banking fees (to the tune of $30 a month – a savings of $360 a year!) by keeping a minimum $5K in our account each month. This has been really beneficial for us because we get to remain with our chosen neighbourhood bank, which has great helpful staff, but also have the benefit of free banking. Yes, we have the “mac daddy” of accounts (hence the $30 fee), but with that we also get a lot of bonuses – and, heck, it’s free for us! DIY free banking!

    With hubby’s job in commission sales, we have to put a good chunk of his pay away every month in case he has a slow month, or in case we have an emergency pop-up – like we did last week when our dog had an unexpected $300 vet bill. Having easy access to our emergency fund was a blessing.

    Of course, when our emergency fund gets to a certain level, and when we finally pay off our last bit of debt, we might look into other ways to make that money work harder for us, but still maintain the $5k in our account to keep our free banking.

    Great post! Got me thinking!

    Good luck building up your funds! You guys sound very determined!


    • Catherine says:

      We’ve scaled back our bank accounts a lot because like you said it was getting messy. It’s still not exactly how I want it but I don’t quite know what it is I want haha. I’m enjoying all the input though giving me stuff to think about!

  12. Our EF, along with all our other savings accounts and checking, is with Ally (internet-only bank). I wouldn’t want to have to wait for a transfer to access the money, though, so if you don’t have a checking account with the same bank I wouldn’t use an internet-only bank for the EF. That said, use ING or Ally for all your banking as they are both awesome!
    Emily @ evolvingPF recently posted..The Marriage Penalty and Itemizing TaxesMy Profile

  13. Lauren Rochon says:

    I love the “pick it off the ground” quote. That is so true! A lot of people will blow off the idea of small amounts of interest because they think it’s not worth it, but it will add up over time. The same thing applies to small purchases. If you buy a $2 cup of drip coffee 5 days a week, thats roughly $40 a month, so it’s not “just” a $2 cup of coffee.

  14. I have 5 savings accounts, 1 with a brick and mortar and 4 online. They are varying degrees of availability. The B&M is for immediate access since online banks take at least a day to transfer the funds. I have one for future bills, one for vacations and one for this is really an emergency. The fifth … well up until now I don’t think I ever thought about it.
    Sunny recently posted..Groceries & hobbiesMy Profile

  15. My emergency fund is sitting in a credit union that I signed up online for. It gives me a great interest rate, but also provides me with a debit card. Now I have interest being earned, but still have instant access to the cash. It is not my regular account, so I never use the debit card.
    Grayson @ Debt Roundup recently posted..The Many Options of Renters Insurance You May Be MissingMy Profile

  16. I have some money in a Barclays online savings account. It pays a whopping 1% but it was the best online rate going last summer. No fees and easy access. I also like the customer service so far.
    Kyle James | recently posted..5 Frugal Tips for Better Home SecurityMy Profile

  17. We have both. We have our $1000 Dave Ramsey endorsed, baby EF in a regular savings account with our regular bank. We did that so if we need it, we have easy access to the money. For our long term savings, we have an account with ING. The interest rate is terrible but at least the money is harder to get to and some interest is better than nothing.
    Jana @ Daily Money Shot recently posted..10 money must haves for momsMy Profile

  18. My teeny tiny EF is in a TFSA with ING. And I freaking love that quote. I think it’s time for me to start reading Money Rules…
    Cait recently posted..Update: January 2013 Budget & GoalsMy Profile

    • Yes you really should Cait, it’s a great book. I’m leaning more towards a TFSA I think…w/ ING (or 360 whatever it is) do they give you debit card access for TFSA?

  19. I don’t like to keep cash in the house either. We keep our emergency fund in our savings account. I definitely like the “if you would pick it up rule.” I pick up pennies!
    Holly@ClubThrifty recently posted..VIP Club Roundup – 17th EditionMy Profile

  20. This is a great post because many times you hear about strategies for building an emergency fund, and every so often you hear about how an emergency fund came into play to cover a cost, but you rarely ever see a post about what to do to replenish your fund once you’ve tapped into it or exhausted it altogether. I suppose maybe that’s because it’s not all that different than starting without one, but I think it does have nuances, since households that once had an emergency fund have built behaviors and such tied to that cushion, which may need to be re-examined, if even temporarily.
    Michael @ So You Think You Can Save recently posted..Research Purchases With Product ReviewsMy Profile

  21. I pick pennies off the ground…. 🙂
    You should open an online saving account with Ally or CIT. The interest is low, but it’s good to maximize the interest.
    Midlife Finance recently posted..The Basics of Insuring Your CarMy Profile

  22. My emergency money is always a savings account. I’m not a huge risk-taker, though. I love that idea….that you’d be THRILLED if you saw it on the ground and would pick it up. “Free” money is good money.
    femmefrugality recently posted..Big Let-Downs on the Deal FrontMy Profile

  23. Woah nice new blog layout! I have about 2k in my emergency fund, and I’m slowly building it back up to $2,500 where it once was. I keep it in my an ING high interest savings account, which is not accessible via debit card but is a simple online transaction away from my chequing account. Once I’m out of debt I’ll build up my emergency fund to include enough savings to cover 3-6 months of living expenses, but for now, 2k covers life’s little surprises while I get out of debt.
    Jordann @ My Alternate Life recently posted..February 1st NETWORTH Update!My Profile

  24. We have our emergency fund in an online savings account. It has atm access though, so it’s pretty easy to access. I like having the cash there to quickly pay for emergencies – we’re going to use part of it to pay off a $6000 re-piping assessment at the condo actually.

    Our financial advisor HATES the idea of a cash emergency fund and has suggested we dump that money into our RRSPs, use the tax refund on our mortgage, and use our line of credit as an emergency fund. While I understand his reasoning – the money will make more of a difference in our RRSPs/mortgage than sitting around in a savings account, I just don’t like the idea of using a LOC as my emergency fund.
    CF recently posted..Mortgages for the self employedMy Profile

    • Catherine says:

      Yeah I get where he’s coming from too, makes sense but I also see where you’re at. Maybe meet in the middle and keep like 2k in an account and if you needed more do as he has suggested?

  25. First off, haven’t been around in a while, but I adore the new blog layout (it’s pink) I’m almost at 3 months of living expenses and it is all sitting my TFSA, with some of it in Mutual funds. I like the TFSA because you can take money out easily but a the same time you are losing contribution room for the rest of the year so it makes you think if what you are actually using the money for is an emergency!
    Janine recently posted..How To: Transfer your RRSP and TFSAMy Profile

    • Catherine says:

      Thanks:) That’s where I’m leaning towards. The hope is that we never need to use the money so why not gain some decent interest while we’re at it?


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