In times of uncertainty, look for ways to control what you can control. I am specifically recommending that you start your first emergency fund and begin a practice of paying yourself first. And if you are going to start piling money away, do it in a smart way and get paid for it along the way by opening a high-yield savings account. There are many large online banks that provide these accounts like Ally Bank and American Express. These banks will pay higher than average interest on savings balances. As of this article, both banks’ interest rates were at 3.6% APY, at a time when many brick-and-mortar banks yield less than 1% APY.
But a new app I have been testing out called Elevault is pretty exciting. It is currently paying an eye-popping 4.6% APY and as I will explain, goes far beyond being just a high-yield savings account.
Let’s start with why we need an emergency fund urgently. Tariffs. The Liberation Day tariffs announced on April 2 caused a wild stock market ride, but its effects on our lives are still unknown. We could experience a ripple effect from tariffs that will start with making our everyday items (large and small) more expensive but then make it likely that businesses have to lay off people to make up for the downward pressure on sales.
But even absent tariffs, we need emergency funds. The problem is that most of us struggle to break even, much less save, in an era where we have Amazon boxes piling on the front porch, payments leaking out of our account in cash app or Venmo and convenience apps like rideshare or DoorDash.
The great fallacy of controlling money is that we think control has to happen in some moral or intellectual way. Like, one day I will have a more Zen-like brain that won’t want all the things I want right now, or one day I will have more brain intelligence, and I will be better able to manage the complication of my spending. When either/both happen, more money will naturally pile up in my account at the end of the month. And then I will save!
The issue there? Really misunderstanding the brain. See, the majority of our decisions to spend are not happening in the thinking brain. They are happening in our caveman limbic system brain that has roots in survival. It’s basically saying, SPEND ALL YOUR MONEY IN YOUR ACCOUNT RIGHT NOW! TOMORROW HAS NO GUARANTEES!
The only time-tested response then is the simplest one. Save first. Literally get the money out of your account before your limbic brain can spend it.
Control what you can control. You can’t control tariffs or what things will cost as a result. But if you save first, then you are putting limits on your limbic brain and protecting yourself from spending all your money.
We call this paying yourself first. You make money disappear out of your paycheck or bank account into savings.
The best way to pay ourselves first is to save into retirement plans, a practice I love and highly recommend. I write extensively about how to open a retirement account and save 10% for retirement in the book But First, Save 10. While I certainly will wax poetic at any chance to get people saving for retirement, the uncertainty with these tariffs are a reminder that we ought to be just as committed to building emergency funds as we are to building a retirement plan.
I have seen the impact of layoffs, and one of them is that when people don’t have an emergency fund to live on during periods of unemployment, they often make the tragic decision to cash out their retirement plans.
In that moment of dire need it makes sense. But the setback to their retirement is more than they anticipate, as it takes decades and compounding investments to be able to earn enough wealth to have the ability to stop working at some point in your 60s.
The only alternative is to turn back time and put modest, monthly deposits into an emergency fund that goes untouched. Put tax refunds into it. Put any cash windfall into it until that goal is reached. Every single working American should have an account that has 3-6 months of spending in it.
But here’s the pickle. Haven’t most of us started some form of an emergency fund at some point? We earnestly start saving a pile of cash, only to find out we need new car tires and wipe out that first $1,000 we just saved?
The truth is that we have periodic, non-emergent cash needs in our lives that are certain to happen but difficult to predict. If we own a home, our air conditioner will break and need repair. If the extended family decides to take a vacation, we might want to go. If Christmas comes around once a year as it seems to every year, we probably will want to keep buying gifts during it.
This last weekend, our dog was having trouble breathing, and we took him to the overnight vet. They saved his life (phew!), and we also got a bill for $1,500 (YIKES!).
Where do these large cash needs often come from? Well, if it’s all we have, then sadly they come from the emergency fund.
The point is that just like we have to protect a retirement account with an emergency fund, we need to also protect an emergency fund with savings for those periodic, unexpected cash needs. Sure, my pet absolutely had an emergency. But any dog owner will tell you that something like this will happen in the course of a pet’s life, and it will be expensive.
The Elevault app, owned by Southern Bancorp, an FDIC insured bank, creates a brilliant solution to not only start an emergency fund but also be able to start small savings accounts to save ahead for expected and often unplanned large cash needs. They call these savings accounts “Vaults.”
Imagine taking a vacation with savings from your Elevault “Vacation Vault” or having an ill-timed air conditioner failure in July get fixed and the bill paid out of your “Home Repair Vault.” Or paying for an emergency vet bill from your “Pet care vault.” The money for these expenses was already accounted for and your emergency fund stays full. Peace of mind restored.
In today’s age of increased complexity of managing all the expenses that happen in our day to day lives and the unknown future coming with tariffs, a simple pay yourself first automation into an account that simultaneously funds an emergency fund and intermediate cash needs is the control we are looking for. Pay yourself first by spending less on things you don’t need. Set it and forget it with the Elevault app. No need to worry from there.
This article was contributed by Sarah-Catherine Gutierrez, a Certified Financial Planner, speaker, writer and owner of a financial planning company, called Aptus Financial.