Emergency Fund Planner

We all know we need an emergency fund, but no one talks about how couples should build one together.

You can use this tool to create a hybrid strategy using high-yield savings accounts and U.S. Treasury Bills that helps your family balance liquidity and after-tax yield.

Fund Plan

Combined Monthly Expenses

$

Fund Status

Balance $27,000.00
Coverage 6.8 months
0 months 6 months 12+ months

Coverage calculated as

Total Balances ÷ Monthly Expenses

One-Year Projection:

Account Strategy

Immediate
4 weeks
4 weeks

What are Treasury Bills?

Government-backed securities that offer higher yields than savings accounts with at least a 4-week maturity.

How much more yield?

Treasury Bills often yield 0.5-1.5% more than high-yield savings accounts. See below for what drives the difference.

What's the trade-off?

Less immediate liquidity (4-week cycles) compared to instant access savings accounts.

What are Treasury Securities?

Treasury securities are debt instruments issued by the U.S. government to fund its operation. For emergency funds, 4-week Treasury Bills are particularly attractive because they:

  • Higher yields: Often 0.5-1.5% more than high-yield savings accounts
  • Government backing: Backed by the full faith and credit of the U.S. government
  • Tax advantages: Exempt from state and local income taxes
  • Predictable liquidity : Mature every 4 weeks with automatic reinvestment options

The key trade-off is a 4-week commitment period versus immediate access to traditional savings.

Tax Benefits of Treasury Securities

Treasury securities offer significant tax advantages that can increase your effective yield:

  • Federal taxation: Still subject to federal income tax
  • State tax exemption: No state income tax on Treasury interest
  • Local tax exemption: No local income tax on Treasury interest

For families in high-tax states (CA, NY, NJ), this can add 0.5-1.0% to your effective yield. For example, a 5.2% Treasury Bill might provide an effective APY of 6.0% or higher depending on your state tax rate.

Why Treasury Bills Often Outperform HYSAs

Treasury Bills often provide better effective returns than high-yield savings accounts (HYSAs) for two reasons:

  • Tax advantages: Treasury interest is exempt from state and local income tax, boosting effective yield — especially in high-tax states.
  • Rate source: Many HYSAs simply pass through Treasury yields via the Federal Reserve's interest on reserve balances. If a bank offers more than that, it's likely subsidized to attract deposits — which may not be sustainable for long-term planning.

Creating a Liquidity Strategy

A well-designed emergency fund balances immediate access with yield optimization:

Account Type Liquidity Typical Use Portion of Fund
High-Yield Savings Immediate True emergencies 15-25%
4-Week Treasury Bills 4 weeks max Major expenses 75-85%

This strategy preserves immediate access to essential funds while earning higher yields on the rest.

Risk Considerations

While Treasury Bills are considered safe investments, consider these factors:

  • Interest rate risk: Rates can change when bills mature and reinvest.
    Mitigation: Ladder purchases across weeks or months to smooth out rate changes over time.
  • Inflation risk: Fixed rates may not keep pace with rising prices.
    Mitigation: Consider keeping a portion of your emergency fund in I Bonds or inflation-adjusted assets if this is a concern.
  • Liquidity timing: You may need to wait up to 4 weeks for full access.
    Mitigation: Use a Treasury ladder to create weekly access, or purchase through a brokerage where you can sell early if needed (prices may vary).

These risks are generally minimal for emergency funds, where capital preservation and reliable access matter more than maximum returns.