Forum: money.stackexchange.com
Tags: <savings><emergency-fund><banking>
Title: Should your rainy day / emergency fund be in the same account as general savings?
Question: Should your rainy day / emergency fund be in the same account as general savings?

Answers:
sents: text: There is no accounting reason that it should be different, there are likely psychological reasons that it should be, however.
text: Assuming that you live in a western country with good banking regulation, you likely have deposit insurance or a similar scheme.
text: Here in Canada we are covered up to $100,000 in a single account with various limitations.
text: At least my rainy-day account plus savings is nowhere near that, so I'm good to go.
text: That said, however, having a large lump of money in an account you regularly use may tempt you more than you can stand.
text: That iPad, car, home improvement, etc., might be too easy to buy knowing
text: you have relatively easy access to that money.
text: So it really becomes a self-discipline question.
text: Good Luck
answer_details: author: money.stackexchange.com/users/258/sdg
score: 9
sents: text: I see two ways to look at it: Discipline:
text: If you keep your emergency fund in a separate account, you will be less likely to dip into it when tempted by a big purchase or investment.
text: Maximize Earnings: If you keep your emergency funds in the same account as your general savings, then the higher balance can sometimes swing you into a higher interest earning rate bracket (depending on your banking institution and balance).
answer_details: author: money.stackexchange.com/users/879/SturdyErde
score: 9
sents: text: i think emergency fund should be in a more liquid account (like regular saving or money market)
text: so you can withdraw money any time, while your regular saving can be tied up in a long term CD, bond or an investment account.
answer_details: author: money.stackexchange.com/users/1353/Vitalik
score: 2
sents: text: I keep several savings accounts.
text: I use an online-only bank that makes it very easy to open a new account in about 2 minutes.
text: I keep the following accounts: Emergency Fund with 2 months of expenses.
text: I pretend this money doesn't even exist.
text: But if something happened that I needed money right away, I can get it. 6 6-month term CDs, with one maturing every month, each with 1 month's worth of expenses.
text: This way, every month, I'll have a CD that matures with the money I would need that month if I lose my job or some other emergency that prevents me from working.
text: You won't make as much interest on the 6-month term, but you'll have cash every month if you need it.
text: Goal-specific accounts
text: : I keep an account that I make a 'car payment' into every month
text: so I'll have a down-payment saved when I'm ready to buy a car, and I'm used to making a payment, so it's not an additional expense if I need a loan.
text: I also keep a vacation account
text: so when it's time to take the family to Disneyland, I know how much I can budget for the trip.
text: General savings: The 'everything else' account.
text: When I just NEED to buy a new LCD TV on Black Friday, that's where I go without touching my emergency funds.
answer_details: author: money.stackexchange.com/users/2084/Erik
score: 1
sents: text: We put our fund in a local credit union that we only use for the emergency fund.
text: We have a savings account that sweeps all funds into a 6 month CD that automatically renews upon maturity.
text: We pretty much don't think about it, and make a deposit with our excess savings after we pay our property taxes in January and school taxes in September.
text: Why?
text: When my wife and I set it up the emergency fund, the purpose is to have a cushion against emergencies, not earning money or having convenient access.
text: We wanted access to the money to be onerous enough that neither one of us could pull money out of without calling someone or driving over to the branch.
text: We even opted not to take an ATM card.
text: In the event that we need the money, we can terminate the CD early and pay a 3 month interest penalty.
text: With $10k, that translates to about $25.
answer_details: author: money.stackexchange.com/users/1288/duffbeer703
score: 1

Summary of the answers:
The reason is more psychological than anything. You may be tempted to spend it. 
Whilst there is no accounting reason why you should treat your rainy-day fund differently from other savings, keeping it in an account which is easily accessible could tempt you to spend it on something unnecessary.