My Favorite Savings Account

I believe in having a savings account for emergencies. (See Step 3.) I think it’s really important to have it “out of sight and out of mind” and automated. This is why I prefer an online Money Market account without a debit card. This account is a “DO NOT TOUCH” Account. Having an emergency account is hard to start, but once it’s there it will give you an unbelievable peace of mind.

Money Market Accounts

Money market accounts are great because they have a higher interest rate than your regular accounts. Currently (January 2019) the interest rate at Capital One 360 is at 2%. It’s been at 2% for over a year now. It’s also accessible if you need it. It’s easy to transfer to your primary checking account if an emergency arises. (2% is for deposits over 10%, under $10,000 it’s 0.85%.)


Make as big of a deposit as you can then start adding $50 a month. $1,000 is the bare minimum to have while working on paying down debt.

As you start trimming nonessential costs from your budget, increase the monthly payment until you have a number that you are confident with. We keep a minimum of $5000 in our emergency account because most of our small emergencies could be calmed with less than $5,000. (We have our HSA, if medical issues arise.) This allows us to avoid racking up credit card debt every time something bad happens. If suddenly we need to replace an old car, we could get by with an older car for $5,000. Anytime we have to use money out of our emergency account, we have to decide how we want to pay ourselves back again. This could be done by cutting out unnecessary spending for a little while, decreasing money that normally goes to our vacation fund, or decreasing our retirement money.

If something really tragic happens we could also use our Roth IRA. Of course, digging into our retirement savings would be a worst-case scenario. This is a personal opinion that works for us. As our budget and finances change we might change and increase our Emergency Savings accordingly.

Opening an account with $250 and then adding a recurring deposit of $50 after 5 years is $3,460, chart from Money Chimp

We receive a small referral from Capital 360 for any new accounts starting at $250

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