Alert
Close

   

Enter the Family Fun Travel Sweepstakes. No purchase necessary. See official rules

Highlights

Open
AARP Family Vacation - Photo Contest

Contests and
Sweeps

Enter the AARP Family Vacation Photo Contest

No purchase necessary. Ends 5/31/15. See official rules. 


Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

You Could Choose Your Dream Vacation
Happy African American couple

AARP Books

Visit the Money Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

Jobs You Might Like

most popular
articles

Viewed

Pay Down Your Debt Challenge

Why You Need Both a 'Rainy Day' and an Emergency Fund

Here's how much to set aside for those surprise expenses — big and small

Pay Down Your Debt Challenge Icon

When it comes to savings accounts, you've probably heard financial advisors and others talk about the importance of having a "rainy day" fund or an emergency fund.

See also: Find extra money to pay off debt.

The point of having a cash cushion, of course, is to lessen the financial blow of dealing with life's unexpected challenges — anything from a car that breaks down to health problems that turn costly.

Even though people use the terms "rainy day" fund and emergency fund interchangeably, these two savings accounts are different in their size, purpose and benefits. So you actually need to have both of these safety nets, in addition to the retirement funds you're currently building.

Here's an explanation of the key differences between a "rainy day" fund and an emergency fund, and some information on how each account can help you and your family.

debt challenge emergency vs rainy day fund two piggy banks face to face

— Photo by: Image Source/Getty Images

Size of Accounts

As a general guideline, you should stash away between $500 and $1,500 to have an adequate rainy day fund.

A rainy day fund is smaller than an emergency fund, which typically ranges between $3,000 and $10,000. In fact, some people may need to amass an emergency fund totaling tens of thousands of dollars in order to create proper economic security.

Next: The benefits of extra savings. >>

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Advertisement

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

member benefit aarp financial service auto insurance

AARP® Auto Insurance Program from The Hartford offers members no-cost quotes.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

Woman holding smartphone in city, Google map tool

Members can find discounts on the go via the AARP® Member Advantages Offer Finder app.

Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.

Being Social

featured
Groups

Hand holding credit cards

Pay Down Your Debt Challenge

Join our challenge July 18-Aug. 14 and start your debt-free journey. Discuss

savingchalleng

Savings Challenge

Have the gift of thrift? Share your tips. Discuss

Advertisement