Rainy Day fund?



What’s a good strategy for building up a rainy day fund?

  • How much?
  • What accounts to place it in?
  • How long should it last me/my family for?


From my perspective, a rainy day fund should be easily accessible. As the name might at least figuratively suggest, this rainy day fund should only be accessed in one-off, unpredictable, urgent / emergency situations (e.g., job loss, medical emergency, etc.), so you don’t want the money held up for too many days. The concern is a bit less about maximizing returns and tax efficiency, and a bit more about a chunk of money that you’re able to access as needed.

I’ve heard advice ranging from 3 months to 1 year’s worth of the costs you need for living for your “rainy day fund.” I try to target somewhere between 6 months and 1 year.

If you don’t want to keep too much cash sitting in a bank account, you could consider having a “tiered” structure where a certain portion of your rainy day fund easily accessible (say, 3 months’ of rainy day savings available via a typical checking or saving account), and the remainder accessible in a more long-term investment vehicle that could take a few days to withdraw funds from.

Consider looking into bank accounts with higher yields and better interest rates (e.g., Ally, Barclays, Synchrony) for a basic rainy day savings account.


I consider the principal (original contributions) in my Roth to be my rainy day fund, which can be withdrawn without penalty. The upside is being able to invest the way you want and not have it sit in a mm or cd. The downsides are more risk (market meltdown), and not being able to “make up” for the withdrawals aside from the yearly max contribution. I only have about 1 month worth of cash and now that I think about, probably should have closer to three.