The Key Difference Between Emergency Fund and Savings Account

emergency fund vs savings account
Feature	Emergency Fund	Savings Account
Definition	Reserved money set aside specifically for unexpected expenses or emergencies.	A bank account to save money and earn interest over time.
Purpose	To cover urgent and unforeseen financial needs like medical bills, job loss.	To save money for short-term or long-term goals.
Accessibility	Highly liquid and easily accessible in emergencies.	Generally accessible but may have withdrawal limits.
Amount	Typically 3 to 6 months’ worth of living expenses.	Any amount, depending on saver’s preference.
Interest	Usually kept in low-risk, liquid accounts that earn some interest.	Earns interest, rate varies by bank and account type.
Risk	Low risk; principal amount is safe and liquid.	Low risk; funds are secure with banking regulations.
Use	Only used for emergencies to avoid debt.	Used for regular savings and planned expenditures.