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Cars break down, roofs leak, medical mishaps occur… all when you least expect it. Adding to an already stressful situation comes the daunting thought of “how do I pay for these expenses?”

Financial experts recommend that everyone should have an emergency savings account to cover three to six months' worth of expenses.

The best way to work towards this goal is to start by saving at least $1,000. At FAIRWINDS we know the importance of emergency savings and the peace of mind it gives you so we created the best savings account for an emergency fund, the FAIRWINDS Emergency Savings account.

The Details

Limit one Emergency Savings account per member.

Current Rate

  • Any balance $0.01 to $1,000 — 2.021% APY
  • Any balance $1,000.01 and above — same rate as our Freedom Savings account

Minimum to Open — $10

Monthly Service Fee — $5, waived with any one of the following:

  • Maintain an average monthly account balance of at least $300
  • Deposit or transfer a total of at least $25 per month
  • Maintain an average monthly combined savings balances of at least $10,000 (excluding checking balances)
  • Freedom Signature Checking or Freedom Preferred Checking account holders

Minimum to Earn Interest — $0.01

Withdrawal Fee — $0

To help preserve your funds for a true emergency, this account is not available to be used for overdraft transfers to checking. If you do need overdraft transfer access, check out the Freedom Account as an option.

See Service Charge Schedule for additional fees that apply to all FAIRWINDS accounts.

APY = Annual Percentage Yield
Fees can reduce earnings on the account.
Monthly compounding interest.

What is an Emergency Savings and Should Your Emergency Fund Be in a Savings Account

Financial freedom seekers are coming in hot with emergency savings because they know life’s curveballs can come at full speed. Car repairs, roof leaks, and unforeseen medical expenses happen, but it doesn’t stop them from achieving goals on their journey to financial freedom.

Are you prepared for an unexpected expense and have your emergency fund ready on hand?

Before you begin saving for emergencies, here’s what you need to know to get started:

What is an Emergency Savings?

Building an emergency savings fund is an important milestone to achieve on your journey to financial freedom. While you’re working towards achieving other milestones like paying off debt, this cushion of savings will help you pay for emergencies in cash without the need for using a credit card or applying for a loan.

When considering what counts as an unexpected event, this includes anything from going to an unplanned doctor’s appointment to fixing your car, or repairing a roof, to name a few. While you can’t always control life’s curveballs, you’re in control of getting ahead and staying financially fit by saving for emergencies.

Now that you know what your emergency cash would be used for, an emergency savings is not the following:

It’s not a retirement fund.

While your emergency savings and retirement savings include setting aside money for the future, your emergency savings are designed to help you with an unexpected, immediate event. On the other hand, your retirement funds are intended for long-term growth to access when you’re ready to retire.

Another difference between your emergency savings and retirement savings is the type of account used to grow your money. Your emergency savings will be kept in a standard savings account and won’t be used every day like your spending or checking account. You’ll still have access to your emergency savings account when you need it, but the money will be separate from what you build for retirement.

Investments are ideal for long-term goals. You can use them to prepare for retirement, or simply increase your net worth. For investing and making the most of compound interest, be sure to set up a 401(k) or 403(b) with your employer if they offer one. As you achieve your financial freedom milestones, consider options like a Roth IRA or an index fund. You’ll still need an emergency savings as you build wealth and invest, and separating these accounts can differentiate your rainy-day fund from your investments.

It’s not an account to save for large purchases.

An emergency savings goal is an important part of your journey to financial freedom, but it’s not the same as goals-based savings. This includes saving to pay for larger goals in cash like buying a car, planning a wedding or vacation, or going to college.

Let’s say you want to build enough savings to buy your next car in cash. Your emergency savings account will be out of sight and out of mind, and you’ll have a separate savings account with funds specific to your car purchase. When you’re ready to buy a car, use the funds you’ve built in the goals-based savings account instead of using your emergency fund.

In order to keep track of multiple savings accounts, we recommend renaming your accounts and putting a name like, “My Next Car” or “Our Wedding.” This will keep your momentum going by having a precise picture of what you’re working towards alongside your emergency savings and expenses.

No matter which goal you’re saving for, a separate emergency fund is vital on your financial freedom journey.

It’s not an everyday spending account.

Your emergency savings account is not for everyday expenses or recurring payments. Instead of dipping into your spending account for emergencies, a free checking or spending account will be used for expenses like bills, groceries, gas, and other monthly expenses.

While you’re keeping a percentage of your spending money in one account, see where you can make changes to start building your $1,000 in emergency savings as quickly as possible. This means finding opportunities in your budget to save, like automatically transferring a portion of your paycheck directly into your emergency savings account.

How Much You Should Have in your Emergency Fund

Financial experts suggest that keeping an emergency savings of at least $1,000 is an ideal emergency fund. Instead of looking at $1,000 like a large goal to achieve, break it down in your budget by saving daily, weekly, or monthly.

For example, by saving $5.55 each day for 6 months or $2.74 each day for 12 months, you’re closer to reaching your $1,000 emergency savings goal faster than you think.

Once you’ve achieved this milestone and you’re ready to start saving 3 to 6 months of expenses, open a separate account to continue earning interest on your money. This will fully fund your emergency savings and cover food, housing, utilities, transportation and other necessary expenses in case there’s a loss of income.

Where to Keep Your Emergency Savings

There’s a variety of savings account choices available to help you build your emergency fund. If you’re looking for the best online savings account for your emergency funds, consider a true Emergency Savings Account. The FAIRWINDS Emergency Savings Account not only is a safe home to park your emergency savings, you’ll earn a premium rate on the first $1,000 you save.

Along with transferring a portion of your paycheck directly into the FAIRWINDS Emergency Savings Account, use an automated debit card round-up program, like change it up, to help grow your emergency savings faster. Available for free with a FAIRWINDS Freedom Spending or Checking Account, each purchase you make with a FAIRWINDS Visa® Debit Card will automatically round up to the nearest dollar. The difference will deposit directly into your FAIRWINDS Emergency Savings Account.

Ready to crush your emergency savings goal and move on to other milestones on your journey to financial freedom? Here are a few key takeaways to put your emergency savings plan into action:

  1. Create or update your budget to see where you can make your changes to start building your emergency fund.
  2. When considering how much money to save for an emergency fund, saving $1,000 is an ideal emergency fund amount to start. Then, after you’ve paid off all your debt, excluding your mortgage, save enough to cover 3 to 6 months of expenses.
  3. Open a FAIRWINDS Emergency Savings Account. This will keep your everyday money and retirement money separate from your emergency savings.

Jumpstart your emergency savings today, so you can say “crisis averted” tomorrow.