Your daughter is crying from the pain after her collision during the soccer game. You know a broken bone when you see one. It’s Saturday evening with no doctor office ope. She needs medical attention as soon as possible! There is a huge problem…your bank account can’t take a hit, the paycheck doesn’t arrive until next week. Thinking to yourself, I can’t afford this! What do I do? Your daughter asks you…” my arm…mom are we going to the doctor?.” Of course, this is your baby girl we’re talking about. It’s time to take her to the emergency room!!

Sitting in the waiting room contemplating where you can save to pay for the visit. We can go out to eat less this month…and we can buy cheaper food at the grocery store…and we can live without cable this month…but the realization comes…you have a problem, one that is no one’s fault but your own.

Your daughter gets the cast she needs and is recovering no problem. A month goes by and the dreadful piece of paper you’ve been waiting for finally comes…the hospital’s statement. $1,233. Tears begin falling…what on Earth are you going to do??

Ask yourself – would this happen to you? Yes? It’s time for a change!!


What is an Emergency Fund?

An emergency fund is a saved up mound of coins (money)that are easily accessible, so you can maintain a normal life when life’s curve-balls get thrown your way. They can be held in savings or credit union checking accounts (to take advantage of rates), but CANNOT be used for anything except emergencies. Emergency funds give you cushion and peace of mind in your life. It’ll let you totally focus on getting your daughter back to health without having to worry about paying your bills while doing it!

If you’re just starting out, the account separation of a savings account is the way to go! Give yourself that one extra step to defend your discipline of spending it on anything else. We will talk to the details of your options below.

Do you need an Emergency Fund?

Ask yourself these questions:

  1. If you lost your job today, could you pay your bills for 3 months with no worry?
  2. Your roof begins leaking during a thunderstorm, are you able to call someone to pay for a new one?
  3. Your car needs an emergency repair, can you pay for it and still keep the lights on this month?
  4. Your child becomes ill and needs you to take care of her for a few weeks, can you take unpaid time off while making ends meet?

If you are unable to pay for unexpected events in your life, then please continue reading :).

Handling emergencies effectively, without increasing your credit card debt, makes building wealth SO MUCH EASIER. High-interest credit cards are a huge detractor from the road to wealth, and we will talk through the decision of paying down debt vs investing in a future post.We believe in building up to level 2 (The Squire below) to complete step V. Once you save up that 1G in your account, you will be ready to continue on to step VI in your new home! We recommend that you continue to save each month after reaching level 2, keep the momentum and keep on leveling!

Did you just graduate from college? After contributing to your 401(k), saving for your emergency fund should most definitely take a new spot in your budget.

Have the discipline to be different, you are a Duke of Dollars!


The Levels of Building an Emergency Fund:

  • Level 0: $0The Scoundrel
    • At this worrying level, you are unable to handle any emergencies in your life. It’s time to start your training!!
  • Level 1: $500The Page
    • You have began your new training towards knighthood by beginning to save each month. It can be a small start, as learning a new skill is difficult. 60% of Americans can’t handle a $400 emergency – now you are in the upper 40.
  • Level 2: $1,000The Squire
    • If you’re familiar with Dave Ramsey’s baby steps, then you know that this is his beginning recommendation. We too see this as a baby step and one that can really give you a peace of mind. You’re able to swing your sword, run the hills, and carry your shield. It’s a great step in the progress and one you should truly feel proud of!
  • Level 3: 1-3 months of living expenses – The Knight
    • Younger Dukes (millennial), with marketable skills and fewer expenditures, 3 months for an emergency fund may be all you need. There is a huge difference in being on your own vs providing for your family. This amount is a situation and risk-averse based. Determine your risk as you did for your 401(k) investing. Keep in mind that the more money you have sitting in cash, that’s fewer greenbacks you have in your army. Then make your decision. Do you want to enjoy knighthood in your younger days, or save more to reach the Duke level? Totally up to you!
  • Level 4: 3-6 months of living expenses- The Duke
    • Becoming a Duke takes more time, more wisdom, and more aging. For those just starting out on the path, this will be the level of an emergency fund you want with your family. Peace of mind and safety are VERY important when you are providing for others. Most millennials should stick with being a knight during their early construction days, but still add more to their emergency fund once they begin settling down.

Emergency Fund Principles:


How quickly can you get the cash from your emergency fund into your hands to use for an emergency? Your safety net or strategy for emergencies should allow you to pay unexpected expenses quickly to keep your peace!


With different options to store your fund, we are talking about the risk that your emergency fund can lose value. As with picking your 401(k) investments, a risk is a personal decision and requires knowing thyself. Higher risk = higher return.


Can I expect the returns from this option to keep up with inflation or increase the value of my stash? Risk, volatility, and returns are factors to decide upon when choosing an option below. What is most important is having the confidence to easily afford unexpected emergencies in your life!


Will this option keep my emergency fund value stable or will it fluctuate throughout the times? Cash and low-interest savings accounts will not, investing can (depending on your investment performance).

Emergency Fund Options:

Picking an option is a choice based on your risk tolerance and keeping your mind at ease. The easiest being saving accounts with investments leaning towards more complex.


How do they meet the principles? We’ve rated them for in the table below with 1 being lowest and 5 being highest.

OptionTraditional Bank Savings AccountOnline Savings AccountCredit Union Checking AccountMoney Market FundsDiversified Investing Portfolio


Savings Account

Both online and traditional savings account are very easy to set up and very easy to use. Create a new one for your emergency fund, set up your direct deposit each month (based on your budget), and then transfer it to your checking when an emergency occurs!

We recommend using a top online savings account (our favorite being CapitalOne 360) to get the best returns for your money. The more Annual Percentage Yield (APY), the more money you receive from the bank each year (see chart below). Although online accounts offer a 1.00% APY, your emergency fund’s spending power will decrease each year based on the 3% average inflation rate.

Credit Union Checking Accounts (Our Duke Exclusive recommended option)

Signing up for a credit union checking account that yields 3.00% APY can be a great location for your soldiers.

There are two caveats here:

  1. Combining your emergency fund in with your regular checking account psychologically makes it easier to spend it
  2. You may have to meet certain requirements to receive the APY based on the credit union. For example, Dupont Credit Community in Waynesboro, VA requires 15 debit card purchases summing at least $250 per month

By utilizing our cash flow budgeting strategy, you’re able to track your expenses to prevent using the balance kept for your fund. If you are able to overcome the psychological aspect, track your balance with a hawk eye, and utilize these returns, then you are looking at a risk-free (assuming an FDIC insured account), inflation defeating, emergency funding option for your kingdom!

Investing in a diversified portfolio -> Higher Risk, but returned the money. 30 % buffer rule

There are financial advisors who give insight into using a bond/stock allocation (60 stock/40 bonds) to beat inflation with returns for your emergency fund. This can be a great option if you are in a great financial situation. If you are just starting out, this might not be a realistic option for you.

Why not?

The stock market’s volatility makes the balance of your investment increase/decrease, especially during market corrections. According to Tony Robbins’s Unshakeable, these happen every year. Even worse are bear markets that take longer to correct themselves. Advisors who like this option use the 30% buffer rule. The rule goes like this if you add 30% on top of your emergency fund, then during corrections, its balance will still meet the goal you set. If you’re living expenses are $1,000 a month, then 3 months + 30% = $3,900. That’s a big chunk of change for those just beginning the journey.

Overall we believe our Duke’s should only look into this option once they have ventured down the roadmap and have gathered the experience of buying and selling investments. Our chart below shows how well it can perform. The psychological aspect of not panicking during corrections and being able to quickly access your money should be taken into consideration.

We didn’t include a certificate of deposits in our options because losing money to retrieve emergency funds too early isn’t part of our kingdom soiree.

Options vs Inflation Visualized:

Let’s take a look at a chart to visualize our options.

This chart is showing how each type of account compares to the historical average inflation rate. 
The APY rates we used were for the best accounts we could find on for that option.


We can see that out of all options, only the credit union checking account and investing (if we have a good 7 years with historical average returns) keep up with the inflation rate. This shows that in order to keep the same spending power of your emergency fund, you will either need to add more funds each year or get higher APY .

It’s time to level up! Your Emergency Fund Starter Guide:

  1. Revisit your budget to determine an area you can cut or how much you can start saving each month
  2. Pick your Emergency Fund option
  3. Sign up for your new account
  4. Set up a direct deposit or automatic transfer
  5. Give yourself a pat on the back, you have taken another step towards a great life and even greater kingdom!

Concluding thoughts

Let’s take a quick moment to reflect how far you’ve come:

  1. You have consistent income
  2. You have a budget strategy
  3. You have committed to financial stability
  4. You have your 401(k) set up
  5. You’ve begun saving your emergency fund

We want to say thank you for reading and thank you for being different. Our readers are now in the top 40% that can handle a 400$ emergency and that is exactly why we began writing these things, to help others, help themselves! It is also nice to learn a bit on the way.

Thanks again and have a great week!


  1. The Simple Dollar
  2. Washington Post
  3. Betterment