Should I build my emergency fund or invest first?
Recent graduates and first-time earners often struggle to choose between finishing an emergency fund, contributing to a Roth IRA, building credit, or selling existing brokerage shares to cover cash gaps. Trying to tackle everything at once without knowing how much living expenses actually cost leads to confusion over whether to split money across goals or fund them sequentially.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
Found another way around this?
Share your steps and trade-offs so fellow engineers don't have to reinvent the wheel. No account required.
Should I build my emergency fund or invest first?
- 1Stop making new investments in the taxable account until the emergency fund is fully fundedDid this help you?
- 2Empty the taxable brokerage account entirely to reallocate funds to savingsDid this help you?
- 3Following personal finance guidelines like the Reddit PF flowchartDid this help you?
- 4Estimating future living expenses based on apartment rent and friends' spendingDid this help you?
- 5Contributing to employer 401k up to the match percentageDid this help you?
- 6Using an existing student credit card and paying the balance in full monthlyDid this help you?
- 7Keeping an emergency fund separate from taxable brokerage accountsDid this help you?
- 8Treating emergency funds strictly for unemploymentDid this help you?
- 9Dividing monthly surplus between both emergency savings and investments using a tiered percentage approachDid this help you?
- 10Paying off credit card debt first while potentially digging into savingsDid this help you?
- 11Using a Roth IRA with contributions that can be withdrawn penalty-free as a dual-purpose emergency fundDid this help you?
- 12Investing 100% of liquid funds into alternative assets like gold, AAA-rated CLOs, and preferred sharesDid this help you?
- 13Relying on taxable brokerage margins, debit cards, and credit lines to cover sudden expenses instead of cash savingsDid this help you?
- 14Keeping money in a high-yield savings account (HYSA) despite potential underperformanceDid this help you?
- 15following retirement contribution order-of-investment flowchartsDid this help you?
- 16keeping a set amount of cash for monthly bills and moving the rest to investmentsDid this help you?
- 17Using a general savings account for all unexpected costs like car breakdownsDid this help you?
- 18Investing spare money into stocks like the S&P 500Did this help you?
- 19Relying on a credit card for purchases and paying it in fullDid this help you?
- 20Following personal finance flowcharts to prioritize emergency funds before investingDid this help you?
- 21Calculating 6 to 12 months of actual monthly expenses to determine a safe cash bufferDid this help you?
- 22Waiting to invest any money until securing a stable job and income streamDid this help you?
In their words
Unedited, grouped by where they were said, most upvoted first within each place, each linked to the thread it came from.
“But I’m thinking to begin having an emergency fund. Do I even need one?”source ↗
“I recently graduated college and got my first big girl job. I’m having a hard time trying to figure out what to prioritize, from savings to investing to even building my credit line.”source ↗
“I know typically people say 6 months of living expenses but since I’ve always lived with my parents I’m not sure how much that is.”source ↗
“Should I complete my goal for my emergency fund first and then start setting aside money for a Roth IRA, or should I try to be contributing to both at the same time?”source ↗
“I want to build my credit but I don’t know how.”source ↗
“I am feeling a bit stuck at the moment. I'm 55 and three years ago I was unemployed for a year and went through my emergency fund. I know I need to re-build my emergency fund but I am also behind in saving for retirement.”source ↗
“Once my credit card debt is eliminated, do I build my emergency fund, contribute to my Roth or a combination of the two?”source ↗
“I have 8k in a HYSA but I know that is not nearly enough.”source ↗
“what events justify selling stock and using the taxable brokerage funds?”source ↗
“If a major repair is needed on my home is that emergency funds or taxable brokerage funds?”source ↗
“The entire job of an emergency fund is to be on the extreme far safe end of the risk/reward ratio. It buys you the ability to take on extra risk with your primary investments.”source ↗
“I have a roth. That’s all taken care of. SP and chilling rn. But I’m not sure about having an emergency savings”source ↗
“Is it bad to say I don’t.. have monthly expenses?”source ↗
“I’m wondering if it’d be reasonable to sell my shares in my brokerage and add the $150 or so in gain to my taxes in order to put that push me closer to the emergency savings goal.”source ↗
“I honestly don't understand the concept of an "emergency fund". Maybe someone can enlighten me. I do not have a savings account at all, and I try to keep my checking account as close to $0 as I can get away with.”source ↗
“I invest every liquid dollar that I own. Not necessarily 100% in the S&P 500 or whatever, but other alternative assets as well like gold, AAA-rated CLOs, preferred shares etc. It seems like the highest ROI on my money to me.”source ↗
“Since we have over 1 year of expenses saved up, should we directing all extra savings into our retirement accounts and brokerage? I think yes, but my wife isn’t as comfortable with that idea.”source ↗
“Order of investment, generally for most people, max out tax advantaged first over a brokerage.”source ↗
“I’ve kept it there because it gives me peace of mind knowing I can cover my bills if I can’t work. My rent is $1,850, and my job just closed, so my income is uncertain right now. Would you keep the $50K as an emergency fund or invest some of it?”source ↗