Change the Name of Your Savings Account to Match Your Saving Style

Financial experts are divided on the use of the term “emergency fund” when it comes to short-term savings. While some believe it instills fear and negativity, others find it practical and necessary.

Pamela Capalad, a certified financial planner, prefers terms like “the yes box” or “rainy day fund” to avoid the negative connotations associated with emergencies. She believes that saving for something bad to happen doesn’t motivate people to save. On the other hand, Jason Ewas, a senior policy manager, finds the term helpful as emergencies can happen to anyone.

When it comes to short-term savings, experts suggest focusing on functionality rather than the name. Chris Peterson, founder of Penny Forward, recommends aiming for around $2,500 in savings to cover unexpected expenses. The key is to have a liquid and flexible account that is easy to access when needed.

Using the money from your emergency fund should not be seen as a last resort. Instead, think of it as a “revolving door” where you can borrow from yourself and replenish the funds later. Automating contributions and enrolling in employer-sponsored savings accounts can make rebuilding your fund easier.

Ultimately, the choice of terminology is up to the individual. Whether you call it an “opportunity fund” or a “rainy day fund,” the important thing is to find a term that motivates you to save. As Capalad puts it, your savings represent your freedom, so choose a term that resonates with you.