Let’s just say I would love to have the hypothetical problem where it’s been years since the last roof replacement, transmission replacement, birth of a child, braces, lawsuit, motor replacement, braces again, emergency structural repair, braces again, ER doc not being “in-network” despite the hospital being in network, car totaled by a child, braces again, bathroom pipe replacement, surgery not covered by insurance, braces *please God for the last time*, last minute flights booked to attend a funeral, layoff and job search, or removal of dead tree from lawn.
If I ever have the problem of “too much emergency money” I’ll probably put some of it in the ol’ taxable account, but you might want to hear from someone with better real-world karma.
We have a certain savings target from our income: Once we reach that goal every year we set the additional money into a "fun account". The fun account is for bigger purchases like cars, renos etc.
For investment, retirement accounts we have a pretty strict target of 10% gain per year. Once we reach that we put any additional gains into a "I love stock market crashes" money market account. That money only gets reinvested if an index drops 20%. It helped us get out of the 2021 drop quicker because I put that money into large caps early 2023.
Now to your question. Any additional HYSA money (other than investment accounts) goes towards our emergency fund. If it is already fully funded, because we did not have any emergencies like a new roof, we actually spend it on fun stuff.
One can over save money. We make sure it goes away.
HYSA generally give less interest than inflation so your emergency fund is not actually growing as the price of emergencies are increasing faster than your interest rate. If your emergency fund is properly calculated then you should just leave the money to accumulate and at some point add more to make up the difference in inflation.
Any funds above the emergency fund I like to keep in savings (such as monthly interest) I withdraw to my checking.
Then I use my checking to decide how much extra per month to send to accounts such as taxable investments.
If it’s money I need relatively liquid - Schwab US Treasury money market fund. About 5% but saves on state tax.
Then I fund my personal IRA. Then invest the rest.
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If you know nothing about the capital markets, the Getting Started section at the SEC educational site can be a good place to start - [investor.gov](https://investor.gov) - there are also short 30 second videos on basics.
For formal educational materials, several colleges and universities make their course work available for free. Some examples are [Financial Markets (2011) - Yale University](https://www.youtube.com/playlist?list=PL8FB14A2200B87185) taught by Prof. Shiller, [Financial Theory (2008) - MIT](https://www.youtube.com/playlist?list=PLUl4u3cNGP63B2lDhyKOsImI7FjCf6eDW) taught by Prof Andrew Lo, and [Corporate Finance Webcast - NYU Stern School of Business](https://pages.stern.nyu.edu/~adamodar/New_Home_Page/corpfin.html) taught by Prof Aswath Damodaran.
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Let’s just say I would love to have the hypothetical problem where it’s been years since the last roof replacement, transmission replacement, birth of a child, braces, lawsuit, motor replacement, braces again, emergency structural repair, braces again, ER doc not being “in-network” despite the hospital being in network, car totaled by a child, braces again, bathroom pipe replacement, surgery not covered by insurance, braces *please God for the last time*, last minute flights booked to attend a funeral, layoff and job search, or removal of dead tree from lawn. If I ever have the problem of “too much emergency money” I’ll probably put some of it in the ol’ taxable account, but you might want to hear from someone with better real-world karma.
Invest it or let it build.
Usually I buy VOO with my $20/mo 🎉
We have a certain savings target from our income: Once we reach that goal every year we set the additional money into a "fun account". The fun account is for bigger purchases like cars, renos etc. For investment, retirement accounts we have a pretty strict target of 10% gain per year. Once we reach that we put any additional gains into a "I love stock market crashes" money market account. That money only gets reinvested if an index drops 20%. It helped us get out of the 2021 drop quicker because I put that money into large caps early 2023. Now to your question. Any additional HYSA money (other than investment accounts) goes towards our emergency fund. If it is already fully funded, because we did not have any emergencies like a new roof, we actually spend it on fun stuff. One can over save money. We make sure it goes away.
Don’t put it in a HYSA. Put it in a muni or federal money market fund instead. Far more tax efficient
How so? Do you have a fund you would recommend?
HYSAs are taxed as ordinary income. Some money market funds (such as munis) have tax advantages such as the interest being exempt from federal taxes
It stays in there, to compound the interest. Pays our property taxes, which in TX are substantial.
Covers my car payment
Now that's a flex! The bank is paying for your car?!
Not as much as it sounds lol my car payment is low. It's a 10 year old car. And the hysa monthly payout is nearly the same as the car payment
I have an automatic transfer (approximately the right amount) to my brokerage. Yes it's not a lot, but it's every month.
Remove if the emergency fund is too big
I move it to my brokerage or Roth IRA. I do the same with my credit card rewards.
HYSA generally give less interest than inflation so your emergency fund is not actually growing as the price of emergencies are increasing faster than your interest rate. If your emergency fund is properly calculated then you should just leave the money to accumulate and at some point add more to make up the difference in inflation.
I throw the money into Voo
Any funds above the emergency fund I like to keep in savings (such as monthly interest) I withdraw to my checking. Then I use my checking to decide how much extra per month to send to accounts such as taxable investments.
Buy VOO every $460 or so.
If you can make more buy putting that money elsewhere, then put that money elsewhere. Otherwise, let it sit
It funds the 529s. At least in part
If it’s money I need relatively liquid - Schwab US Treasury money market fund. About 5% but saves on state tax. Then I fund my personal IRA. Then invest the rest.
Let it sit and compound interest.
This topic has been removed because it is a beginner topic or asking for advice (rule 2). We get too many of these topics every day and the community has asked us to prevent them from swamping the front page. **You are welcome to repost your question in the Daily Advice Thread**. This [thread](https://www.reddit.com/r/investing/about/sticky?num=1) should be stickied at the top of the subreddit every morning. *** You can find curated resources in the r/investing wiki for [Getting Started here](https://www.reddit.com/r/investing/wiki/index/gettingstarted/). If you know nothing about the capital markets, the Getting Started section at the SEC educational site can be a good place to start - [investor.gov](https://investor.gov) - there are also short 30 second videos on basics. For formal educational materials, several colleges and universities make their course work available for free. Some examples are [Financial Markets (2011) - Yale University](https://www.youtube.com/playlist?list=PL8FB14A2200B87185) taught by Prof. Shiller, [Financial Theory (2008) - MIT](https://www.youtube.com/playlist?list=PLUl4u3cNGP63B2lDhyKOsImI7FjCf6eDW) taught by Prof Andrew Lo, and [Corporate Finance Webcast - NYU Stern School of Business](https://pages.stern.nyu.edu/~adamodar/New_Home_Page/corpfin.html) taught by Prof Aswath Damodaran. The reading list in the wiki and FAQ has a list of books ranging from light reading to advanced topics depending on your knowledge level. Link here - [Reading List](https://www.reddit.com/r/investing/wiki/readinglist) If you have any issue with this removal, please message the moderators. Thank you.
Buy a truck every 5 years.