Many Americans end the year with a long list of bills and little (or no) cash left over. Holiday spending often adds financial pressure while everyday expenses continue to climb. And if an unexpected cost hits at the same time, they may need to rely on credit cards to get by.

That’s why building a small rainy day fund is so important. It can give you breathing room when surprises happen.

A rainy day buffer can be a great way to cover the small emergencies that disrupt your budget, like a flat tire or an unexpected trip to urgent care. You don’t need thousands of dollars to avoid going off budget in these situations. And a few smart banking tools can help you build the financial cushion you need before the end of the year.

Many households face challenges when it comes to savings.

The Federal Reserve’s 2024 Economic Well-Being report found that 37% of Americans can't cover a $400 emergency expense with cash. Meanwhile, LendingClub’s Paycheck-to-Paycheck report showed that more than 60% of U.S. adults live paycheck to paycheck (including 45% of consumers in high-income groups). That’s why building a rainy day buffer is so important.

A rainy day fund covers smaller, short-term emergencies. Think: car repairs, doctor visits, unexpected prescriptions, and higher seasonal utility bills — basically any smaller, unexpected expense that isn’t typically part of your regular monthly expenses.

An emergency fund, by comparison, is meant to help you through larger financial emergencies such as losing your job or a major health crisis.

Both types of savings are important, but they play different roles in your household budget. Even a small savings fund protects your finances by reducing your dependence on credit cards and other types of debt. Most of all, a rainy day fund gives you more control when unexpected bills threaten to disrupt your finances.

Many banks (especially online banks) offer features that make it easier to turn savings into a habit. You can find financial apps outside of your bank to help support your savings goals too. These tools can automate the savings process, help create separate savings goals, and grow your cash at a faster rate.

Automating contributions to your savings account allows you to save without overthinking (and on a schedule you control). You can set up a daily, weekly, or paycheck-based transfer schedule and grow your rainy day fund on autopilot.

Many banks offer automatic transfer features within their online dashboards (Wells Fargo, Chase, and Ally Bank are a few examples). Automated savings tools support consistent saving because you decide the amount and timing ahead of time when you create your budget. But you can also adjust the transfer plan at any time if your income changes.

Round-up features essentially move small amounts of money to your savings every time you spend. When you make a purchase (typically using a debit card from a linked checking account), the bank rounds the transaction up to the next dollar and shifts the difference to savings.

A few popular examples of round-up savings include:

Chime "Round Ups"

Bank of America "Keep the Change"

"Round-ups" by Acorns

Round-ups work well because they can fit smoothly into your current spending habits. And small savings amounts can add up over time when you stay consistent, even on a tight budget.

If you saved $2.35 every day for a month (30 days), you would build $70.50 in savings with no extra effort.

Today, the average savings account rate is just 0.4%, according to the FDIC. At less than half a percent, you won’t earn much interest on your savings with a traditional savings account.

However, high-yield savings accounts (HYSAs) pay interest well above the national average. In fact, some of the best high-yield savings accounts currently offer rates of up to 4% or more.

For example, if you deposited $1,000 into a savings account that earns 0.4% APY and let your money sit in the account for one year, your ending balance would be $1,004.01 (your $1,000 contribution, plus $4.01 in interest).

But if you put that $1,000 into a high-yield savings account that earns 4% APY, you’d have a balance of $1,040.81 in one year. That’s an extra $36.80 in interest. Of course, the more you deposit, the greater your interest earnings will be.

In other words, taking advantage of higher interest rates helps your rainy day fund grow faster without extra work on your part. So, it’s a good idea to shop around and compare savings account rates and features to ensure you’re getting the best deal available.

Some banks offer another useful feature called “savings buckets.” This tool creates mini savings categories within a single account. You can assign a bucket to your rainy day fund, one to holiday savings, another to travel, and so on. It’s similar to a digital envelope budgeting system, but specifically designed for savings.

Savings buckets can help you stay organized because the money stays in one account while each goal has a separate label, making it easier to track your progress and ensure you don’t spend money earmarked for a different purpose. Numerous online banks offer this feature, including Ally and SoFi.

Once you have a little cash in your rainy day fund, linking your savings account to a checking account at the same bank can be incredibly helpful.

For one, it allows you to transfer money instantly when you need to cover an upcoming bill without delay. It also makes it easier to automate your savings contributions. And some online banks even offer higher “relationship” savings rates and other perks when you open multiple types of deposit accounts with them.

Discover and Capital One are two examples of online banks that offer linked accounts with high APYs and user-friendly apps. When checking and savings work together, you gain better visibility of your overall financial picture and faster access to your money.

Read more: What is relationship banking, and is it worth it?

Creating even a small rainy day fund may protect your finances and help you avoid debt. If you’re ready to get started, the steps below can help you build your rainy day fund quickly.

1. Review your last 90 days of spending. Look for spending patterns you might be able to improve or eliminate, such as subscriptions you don’t use, rising grocery costs, or frequent small purchases that drain your budget. Financial awareness can help you find savings opportunities.

2. Set a short-term goal. A clear number can help keep you motivated if you want to build a rainy day savings fund before year-end. Consider aiming for $300 to $500 by December 31. (It’s also fine to adjust that number up or down depending on your financial situation.)

3. Cut one cost temporarily. Consider dropping or reducing one expense for 30 days, such as a streaming service or ordering takeout. Then move that money to savings. A short-term sacrifice could help you build momentum and reduce financial stress.

4. Try a short-term savings challenge. Gamifying your savings can help you stay motivated through the end of the year. Try a savings challenge, such as the $5 bill challenge or the $1,000 savings challenge, to make saving more fun.

The right number varies by household because every financial situation is different. But a good rainy day buffer often ranges from $500 to $1,000.

A full emergency fund, by comparison, should contain at least six months' worth of expenses. And some financial experts recommend stashing away up to 12 months of savings if your income is unpredictable or fluctuates month to month.

Read more: How much money should I have in an emergency savings account?

Of course, building a larger savings fund takes time. So, starting with a smaller rainy day savings goal first could make sense if you’re just beginning your savings journey. Even $1,000 in savings could make a meaningful difference in your financial well-being if you put your money to work wisely.

Today, the national average interest rate for savings accounts is just 0.40%, according to the FDIC. But that doesn’t mean you’re stuck earning a low rate on your savings.

Many banks and credit unions offer high-yield savings accounts with an annual percentage yield (APY) of 4% or more, allowing you to maximize your savings potential and hit your savings goals even faster.

Here’s a look at some of the top federally insured high-yield savings accounts available today that currently offer 4% APY and higher.

Note that interest rates, fees, and requirements are accurate as of the publish date. Please verify account details directly with the financial institution.

Digital Federal Credit Union (DCU) offers a high-yield savings account with the highest APY on our list at 5%. The catch: This rate only applies to balances up to $1,000; balances above $1,000 earn 0.05% APY. Even so, this great rate could get the ball rolling on growing your savings.

The minimum deposit needed to open this account is $5.00, and there's no monthly maintenance fee or minimum balance required to earn the disclosed APY. Eligibility for membership with DCU is determined by a prospective member’s relationship to a current member, employment at an eligible company, geographic area, or involvement in qualifying organizations.

Varo Bank’s High-Yield Savings Account offers an attractive 5% APY on balances up to $5,000 (balances over this threshold earn 2.5% APY). There’s no minimum balance required and no monthly fees. This account also allows for automatic round-ups to give your savings a boost over time.

Read our full review of Varo Bank

​The Pibank Savings account offers a competitive 4.6% APY with no fees or minimum balance requirements. Interest accrues daily and is credited monthly on the 15th.

FitnessBank — a division of Affinity Bank — is a new online lifestyle bank. The Fitness Savings Account requires a minimum opening deposit of $100. There is a $10 maintenance fee, which can be waived with a $100 minimum average daily balance. Customers who also open an Elite Checking account can boost their rate to 4.85% APY.

The AlumniFi Savings account is a tiered account that pays higher interest on higher balances:

Tier 1 (up to $24,999): 3.8% APY

Tier 2 ($25,000 to $99,999): 4.05% APY

Tier 3 ($100,000 and up): 4.3% APY

AlumniFi accounts are held at Michigan State University Federal Credit Union where savings are federally insured to at least $250,000 by the NCUA.

Read our full review of AlumniFi

The Ivy Bank High-Yield Savings Account offers 4.25% APY on balances of $2,500 and up (balances below this threshold earn 0.05% APY). Interest is compounded daily and credited monthly.

Bread Savings’ High-yield Savings Account offers 4.15% APY with no monthly fees. You must deposit a minimum of $100 to open an account. Interest is compounded daily and credited monthly.

Read our full review of Bread Savings

LendingClub’s LevelUp Savings account currently offers 4.2% APY with no minimum balance required. But in order to earn the highest advertised rate, you must deposit at least $250 to the account monthly. If you miss a month, your balance will earn 3.2% APY instead.

There are no monthly fees associated with this savings account. Interest is compounded daily and credited monthly.

Read our full review of LendingClub Bank

The Jenius Bank Savings account offers an impressive 4.05% APY with no minimum deposit or minimum balance requirement. There are also no monthly fees, and customer service representatives are available 24/7.

Read our full review of Jenius Bank

EverBank’s Performance Savings pays 4.05% APY on all balances. There is no monthly maintenance fee or minimum balance requirement. This account is completely free to open, and interest is compounded daily.

Read our full review of EverBank

First Foundation Bank’s Online Savings Account offers 4.1% APY with no monthly maintenance fees. The minimum opening deposit is $1,000, and you must maintain at least $0.01 to earn interest.

Read our full review of First Foundation Bank

Popular Direct’s Select Savings Account currently offers 4% APY with a minimum opening deposit of $100 and no monthly fees. You must maintain at least $0.01 in your account to earn interest.

Read our full review of Popular Direct

BrioDirect’s High-Yield Savings Account boasts 4% APY with no monthly maintenance fees. You need a minimum of $5,000 to open this account and must maintain at least $25 to earn the disclosed APY.

Read our full review of BrioDirect

The Premier Online Savings Account from Poppy Bank offers a competitive 4% APY. This rate only applies to accounts opened online, and a minimum balance of $1,000 must be maintained to obtain the advertised rate.

Read our full review of Poppy Bank

Financial technology company Current offers a bank account with sub-accounts known as "Savings Pods." You can earn 4% APY on up to $2,000 per Savings Pod ($6,000 maximum) by direct depositing at least $200 monthly (you'll earn 0.25% APY if the requirement is not met). Balances above $6,000 do not earn interest.

Read our full review of Current

The amount of interest you can earn with a rate of 4% depends on how much money you deposit. The more money you keep in your account, and the longer you hold it there, the more you stand to earn thanks to compound interest.

For example, if you deposited $1,000 into a 4% interest savings account that compounds interest daily and left the money there for one year, you'd earn a total of $40 in interest (assuming you don't make any additional contributions).

Let's say you deposited $10,000. At the end of the year, you'd earn $400 in interest. And if you made an additional $100 contribution each month, you'd end up with $421.84 in interest earnings.

Finding a savings account that pays 4% on your balance is a great way to give your savings a boost and help it grow over time. However, there are additional steps you can take to get the most value out of your account.

Start with a higher principal balance: The more money you deposit initially, the more interest you earn from the start.

Contribute regularly: Consider setting up automatic transfers to the savings account. Even small, consistent deposits can make a big difference over time. If you contribute $100 monthly — that’s an extra $1,200 per year that earns 4% interest, which compounds to grow even more.

Take advantage of compound interest: Make sure the interest on your account compounds at least monthly, if not daily. The more frequently interest is compounded, the more your money will grow.

Keep your money in the account: Each time you withdraw funds from your savings account, the principal balance that earns interest decreases, which reduces the overall growth potential. A checking account or money market account may be a better fit for money you need for daily spending or paying bills.

Watch out for fees: Look for a savings account with no monthly maintenance fees or other charges that could eat into your interest. Some high-yield accounts have minimum balance requirements to avoid fees or earn the highest advertised rate, so be sure you can meet those minimums — or choose an account with no minimum balance requirement.

Savings accounts that offer 4% are becoming increasingly hard to find. Recent rate cuts by the Federal Reserve signal that the economy is moving in the right direction, but they also mean deposit account rates are on the decline.

Additional rate cuts could be on the horizon, so it pays to take advantage of an account with a higher rate while it lasts.

For those looking to maximize their savings, it might be wise to take advantage of current rates while they remain elevated. If you want to lock in today's higher rates, you may want to consider a certificate of deposit (CD) instead of a high-yield savings account.

If you’ve ever come down with a bad case of FOMO, you’re not alone. The problem: It could be harming your financial security.

From viral TikToks about overnight crypto fortunes to friends bragging about their 10-step luxury skin-care routines, financial FOMO is common. Surveys show that social comparison plays a growing role in everything from overspending to risky investing behavior.

But when fear or anxiety fuels your financial decisions, mistakes tend to follow. Understanding how to spot (and stop) financial FOMO could be the key to getting your savings on track.

“Fear of missing out” — also known as FOMO — is the anxious feeling that other people are having rewarding or exciting experiences than you are. FOMO might cause you to go out, take certain trips, or buy specific items to keep up with your peers, even if you wouldn’t want to otherwise.

Financial FOMO, specifically, is the fear of missing out on money-related opportunities. For example, you jump into trendy investments, overspend during sales, or rush major financial decisions because of the perception that others are doing it and benefiting.

So what causes FOMO? Experts say it can stem from a variety of factors, but social media often plays a significant role. Half of the respondents in a recent Empower survey said seeing what others are buying on social media motivates them to spend money due to a fear of missing out.

“As a society, we are very uncomfortable talking about finances, and it can cause people to overspend to keep up with their friends or appearances on social media, instead of being honest about their financial situations and limits,” said Julie Beckham, financial education officer at Rockland Trust Bank.

Plus, it’s easier to give in to temptation when your social media feeds are flooded with advertisements, gadgets, travel content, concerts, exclusive dining experiences, and more.

However, the short-term satisfaction that often comes with impulse buying can lead to long-term financial pain, according to Beckham.

Read more: Behavioral Finance 101: 7 ways your brain can sabotage your finances

When your spending decisions are driven by a fear of missing out, rather than your true needs and values, it can derail your long-term goals and sense of financial security.

Some of the ways financial FOMO can negatively impact you include:

Impulse spending on so-called deals: FOMO makes limited-time sales and social media must-haves feel urgent. So you end up buying things you didn’t plan for, pulling money away from your established savings goals.

Chasing trends instead of your budget: When you see others upgrading their lifestyle, it’s easy to rationalize spending you can’t actually afford. This leads to budget creep, where your monthly spending starts to increase while your savings shrink.

Taking on unnecessary debt: FOMO can lead to using credit cards for purchases you can’t afford just to participate. And if you carry a balance month to month, those double-digit interest rates cause your debt to grow faster than your savings.

Risky investments that backfire: Seeing others “making big gains” can push you into volatile or speculative investments. But meme stocks and fly-by-night crypto investments only work out for a handful of people — and by the time everyone is talking about it, it’s usually too late to capitalize on the hype. If the market turns, you lose money that could’ve gone toward tried-and-true savings and investment options.

Not sticking to long-term goals: FOMO shifts your focus to what others are doing instead of what’s right for you. These distractions can cause you to lose focus on your long-term priorities and plans.

That said, a bit of FOMO isn’t always a bad thing. The same Empower survey found that over 15% of those who experienced financial FOMO said it inspired them to invest, while others said it made them open a new savings account (14%) or improve their debt repayment strategy (13%).

The key is to channel your financial FOMO into positive money habits. For example, watching your peers achieve major milestones (such as buying a home or funding a college education) can prompt you to take your own planning seriously, rather than putting it off. Your friend’s once-in-a-lifetime trip to the Maldives could inspire you to cut back on discretionary spending and start taking your travel savings fund seriously.

Read more: How I pair travel credit cards with a high-yield savings account to maximize family vacations

If you struggle with financial FOMO, the first step is reshaping the narrative in your mind. If you condition yourself to feel disappointed each time you see something on social media that you can’t afford, you may overlook all of the things you can afford to do and the financial goals you will achieve if you stick to your budget.

Beckham said her biggest piece of advice is to create an intentional spending plan. “Starting early and saving and budgeting consistently can really pay off and put you in a position to better assess what added expenses you can say yes to,” Beckham explained. “It feels a lot better to save for a year to go away than to go away and spend the next year paying for that vacation, plus interest.”

Establishing a values-based budget can help you align spending decisions with the things and experiences that actually matter to you. When you’re tempted to make a purchase, ask yourself how that purchase would fit within your value system. If it doesn’t, you’ll feel better about skipping it.

If you’re easily tempted by what you see on your social feeds, set yourself up for success by being intentional about the kind of content you consume.

Consider adjusting your account settings to limit the number and type of advertisements you see on your feeds, and set daily screen time limits to reduce the time you spend scrolling. You may find it easier to avoid financial FOMO if you can’t see what you’re missing.

Declining an invitation isn’t a crime. If you’re asked to join an expensive dinner or weekend away with friends and it doesn’t fit into your budget, learn to be OK with saying “no” for your own financial well-being. Having open and honest conversations with your loved ones can help them better understand why you might be skipping a particular outing and may even prompt them to come up with more affordable alternatives so that you don’t have to miss out.

Read more: How the 'loud budgeting' trend could help you save more money

Even though savings accounts are one of the most common financial tools, they still spark a lot of confusion — from how much you should keep in one to how much interest you can actually earn.

To clear things up, we dug into the most common questions people search on Google and answered them in plain English. Here’s what savers are really wondering, and what you need to know to make the most out of your savings account.

Let’s start with the basics. A savings account is a type of deposit account that lets you store money securely while earning interest. They can be found at most banks and credit unions.

The interest you earn in a savings account is represented as the annual percentage yield (APY), which is the total amount of interest you would earn in one year when factoring in compound interest. The higher the APY, the more interest you earn on your balance.

Learn more: What is a savings account and how does it work?

Yes, you must pay taxes on the interest you generate in a savings account, since interest earnings are considered taxable income. Your bank will typically issue a Form 1099-INT if you earn $10 or more in interest for the year. However, even if you don’t receive this form, you’re still expected to report all interest income on your tax return.

The good news: You are not taxed on the principal balance, because you've already paid taxes on that money before depositing it into your savings account.

Learn more: Do you have to pay taxes on your savings account?

The amount of interest you earn on your savings depends on a few factors, including the interest rate, compounding frequency, and whether you make additional contributions.

Let’s say you have $10,000 in a savings account that earns 0.4% APY (the national average). You let your money sit in the account for one year and don’t make any additional contributions. In this case, you’d earn about $40 in interest, bringing your total balance to $10,040 after one year.

Now let’s say you put that $10,000 into a high-yield savings account that earns 4% APY. After one year (assuming no additional contributions), you’d earn about $407 in interest for a total balance of $10,407.

Keep in mind that savings account rates are variable, meaning they can change at any time. So, the rate you’re earning today could go up or down in the future at the discretion of your bank. Additionally, fees can impact your actual earnings.

Learn more: How to calculate interest on a savings account

When it comes to the amount of money you should keep in a savings account, there’s no one-size-fits-all number. It’s really dependent on your unique financial situation and goals.

Generally, experts suggest keeping at least three to six months’ worth of essential expenses in an easily accessible savings account. But ultimately, you can keep as little as your bank’s minimum or as much as $250,000 (the limit for standard FDIC insurance). Keeping more than $250,000 puts those funds at risk if the bank ever fails.

Learn more: How much money should you keep in a savings account?

Yes — your savings account is your money, and you can generally access it any time. However, it’s important to keep an eye on withdrawal limits.

Before 2020, Federal Regulation D capped “convenient” withdrawals from savings accounts at six per month. That rule has since been lifted, but many banks still enforce their own limits and may charge fees if you exceed them.

This doesn’t prevent you from accessing your money; it just means you may need to be mindful of how often you transfer or withdraw funds to avoid fees.

Learn more: Savings account withdrawal limits: What you need to know

There’s no one bank that offers the best savings account. That’s because “the best” savings account for you depends on what you want to get out of it. Maybe you’re looking to earn the highest interest rate possible. Or perhaps you’re looking for an account with no minimum balance requirement. Maybe avoiding fees is your top concern.

In general, it’s best to choose an account that offers a mix of these benefits — high rates, low fees, and added perks to help you get the most value from your account.

Online banks — such as Ally, SoFi, and Discover — are a great place to start your search for savings accounts. Credit unions also tend to have solid options.

Learn more: The 10 best high-yield savings accounts available today

Yes — you can technically have as many savings accounts as you want, though there are some pros and cons of having multiple accounts to consider.

One of the biggest advantages is the ability to separate your funds and track progress toward multiple savings goals, such as building an emergency fund, saving for a down payment on a home, or setting aside money for a big vacation. Multiple accounts can also help you take advantage of higher APYs, bonuses, or special promotions from different banks. And for those with larger balances, splitting savings across different financial institutions can ensure all of your money is protected by FDIC insurance coverage.

However, there are some drawbacks. Managing several accounts means more logins, more statements, and more mental bandwidth needed to manage all of your accounts. Additionally, some accounts may charge monthly fees, inactivity fees, or require minimum balances — costs that can eat into your interest if you're not careful. Plus, earning interest across multiple bank accounts means receiving multiple 1099-INT forms at tax time, which can add extra paperwork.

Learn more: How to use multiple accounts to achieve your savings goals

The 50/30/20 rule is a budgeting strategy in which you set aside 50% of your after-tax income toward needs, 30% toward wants, and 20% toward savings (which includes making extra payments toward debts).

This method helps simplify the budgeting process and ensures that you set aside enough money for savings while meeting your other obligations.

Learn more: Struggle with budgeting? Following the 50/30/20 rule could be your solution.

Yes — a routing number is a nine-digit code that identifies your bank or credit union. While your savings and checking accounts will have different account numbers, they typically share the same routing number if they’re at the same institution.

You can locate your routing number by referencing one of your paper checks, logging onto your online account, or checking your financial institution’s website.

Learn more: How do I find my bank account number​?

As long as your savings account is held at an FDIC-insured bank, your deposits are protected up to $250,000 per depositor, per institution, per ownership category.

Most banks clearly display their FDIC status on their website, but you can also verify it using the FDIC’s BankFind tool.

Learn more: What is the FDIC, and how does it work?