3-6 months of living 


  CDs or money market 


  US Treasury Bills




If you’re feeling financially 

stressed—which can happen when 

you’re juggling work, education, 

and family responsibilities— 

saving and investing may be the 

last things on your mind. Yet both 

are essential to your financial 

security and the security of the 

people who depend on you. And 

getting started doesn’t require a 

big commitment of money or time.


Financial emergencies have a 

nasty way of cropping up at incon-

venient times: Your car needs a 

major repair, the refrigerator dies, 

or, worse yet, you or your spouse is 

out of work for several months and 

you need money to cover the mort-

gage or other regular expenses. 

Other unexpected events—

even pleasant ones, such as your parents’ 

anniversary party or a chance for your children to 

go to a sports or music camp—can foul up your 

spending plan. 

Of course, you could put some of these 

expenses on a credit card. But you risk increasing 

these costs significantly if you pay off the bills 

over an extended period. And, in the worst cases, 

the expense may put you over your line of credit. 

The better solution is to build an emergency 

fund—sometimes called a rainy-day fund—by 

saving a regular amount from each paycheck until 

you hit your target. As a rule, your emergency 

fund should provide a minimum of three to  

six months of living expenses in easily accessible 

accounts, such as certificates of deposit (CDs), 

13-week US Treasury bills, and money market 


Easily accessible accounts are liquid, which 

means you can sell or redeem them quickly for 

cash with little or no loss of value. In addition to 

being liquid, these accounts are either federally 

insured or, in the case of Treasury bills, backed  

by the government’s promise to repay.

With CDs, you can use a technique called  

laddering. Instead of putting your entire emer-

gency fund in one CD, you can split the money 

among three or four one-year CDs that mature at 

regular intervals during the year. The staggered 

maturity dates reduce the risk of having to take 

an early withdrawal. If there’s no emergency, you 

can roll the CD over for another term. 


Once you have an emergency fund, saving can also 

help you meet short-term goals, such as the down 

payment on a new car or the money to pay for a 

family vacation. Saving is all about putting away a 

regular amount on a regular basis. Sure, you may 

earn some interest, but what really builds your 

account value is regular cash infusions. 

Saving and Investing

Putting money aside can help meet emergencies and long-term goals.


veterans HanDBOOK