My savings account will be for emergencies only, and only if my checking account can’t afford it. For those that may not know, an emergency is an “Unexpected Occurrence that Needs to be Addressed Immediately“. If my phone is not holding charge throughout my day, than I will go to replace the phone before it stops working completely and becomes an emergency. The emergency fund will be about 6 months of my income up to $250,000 which is the maximum FDIC will insure an account. Since my current bank has my checking account, I will need another bank for my savings.
So what would happen if I have to use the emergency fund. I will transfer the money from the savings to my checking account. This will take a couple of days. Once the money transfers to my checking account, I will then pay for the emergency. In the future months, I will do minimal discretionary spending until the account is back to where it is supposed to be. This step is essential for continuing the role of the emergency account.