My Multi-Layer Emergency Fund


There are so many guides on emergency funds out there. In my opinion, there are too many and it makes people unsure what to do. I even wrote about the basics of an Emergency Fund. I often see people over complicate emergency funds and finances in general. Remeber the focus should not be over complication, as you are wasting time instead of building wealth. The focus should be on simplicity in a system that can build your wealth long term.

My multi-layer emergency fund system has allowed me a simple approach to be secure yet grow my stash!

Let’s break down my multi-layer emergency fund.

  • Checking Buffer
  • Money Market Savings
  • CD
  • Taxable Account

Checking Buffer

I keep $300 in my checking account as a buffer. This would be in case I go over budget for any category in my monthly budget. Or as a first in the line of defense for an emergency.

Money Market Savings

This is just a high yield savings account. I keep $3,000 in this account. I have thought about upping it recently. Yet as of now I have not pulled the trigger.


I have a 12 month CD earning me 3% with $3,000 in it. I can pull money out at any time from this account. With a high penalty of around $20 or less. I choose to do this because of the 3% returns. It helps me earn a higher return than the MM account while still being very stable.

Taxable Account

I am sitting on about $21,000 in this account. I can pull this at any time I want. The only thing that would happen is I would have to pay capital gains tax on any gains. I finally opened a taxable account in October of 2016. It took me years to open one, mainly because I was scared. Before I just had all my extra cash sitting in the MM account earning me less than 1%. Finally pulled the trigger and moved some of it to this account. This was the smartest money move I made in 2016.

My monthly expenses are fairly small at around $1,900. That is about 14 months worth of expenses I have or roughly $27,300. I love my simple system. I have plenty of cash for what if’s, and a good chunk of money growing in my taxable account. The taxable account can also be used for future big purchases like a new vehicle, down payment on a house, wedding, I think you get the point. I continue to simplify my finances as it optimizes them. I have almost doubled my net worth this year by keeping things simple. I must admit it feels great having about $27,300 outside of my retirement vehicles that I can use. What is ironic is the more I grow this stash the less desire I have for flashy things like a new vehicle which I could pay cash for.

3 Replies to “My Multi-Layer Emergency Fund”

    1. Hey Andrew,

      Thanks for reading my post. I currently use Navy Federal Credit Union (NFCU) for my CD. I use them for checking and savings accounts as well. They are a great credit union but only military and family of the military can get access to their products.

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