Digital Advisor can help you get ahead of unexpected expenses

Read time: 3 to 4 minutes

Picture it: Life throws you a curveball, like a car inspection gone wrong or a broken water heater. Can you afford it? It’s OK if the answer is no. A recent survey shows that more than half of Americans don’t have enough savings to cover a surprise $1,000 expense.1 To pay for unplanned expenses, some may have to tap into their retirement savings, which could hurt their long-term goals. Fortunately, Vanguard Digital Advisor® can help you make smart decisions about your money so you’ll feel more prepared to handle unexpected expenses.

Read on to learn more about saving for an emergency. And don’t forget to complete your investor profile so you can take advantage of Digital Advisor’s financial planning tools.

Make emergency savings work for you

You may have heard this rule of thumb: Save at least 3 to 6 months of expenses in cash as emergency savings. But since everyone’s financial situation is different, this may not be the best strategy for you.

How much money you need for emergencies, and how to invest that money, depends on your situation.

  • Do you have children?
  • Do you rent or own your home?
  • Is your job secure?
  • Could you rely on someone else’s income if you lost yours?

The answers to these questions can help you make realistic decisions about how much you should save for emergencies. If you have children or your job isn’t secure, you might need to save more money. On the other hand, if you can rely on someone else’s income if you lose your job, or you have other assets you can tap into, you might be able to save less.

Next, you’ll want to consider how to invest your emergency savings.

Choosing your investment strategy

When you set money aside for an emergency, you put it to work for you at the same time. And you have options when it comes to investing your emergency savings.
Vanguard can help you decide which investment type might work best for you and your emergency savings. In fact, Digital Advisor’s Rainy Day Tool is designed just for that. To access this powerful tool, complete your investor profile.

An umbrella for a rainy day

The confidence that comes from knowing you can afford unexpected expenses without putting your long-term goals at risk is priceless. And our Rainy Day Tool can help you build that confidence. Here’s how.

It helps you decide how much to save. The tool considers some of your basic financial info and asks a few questions about your situation. Then it determines how much you should save for emergencies.
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It suggests where to save your money. There are different types of investment and account options for your emergency savings. The Rainy Day Tool can help you figure out which ones are best for you.
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It lets you know whether or not you’re on track. If you’re not on track to meet your emergency savings goals, the tool gives you suggestions to help you get there. It also estimates how long your emergency savings should last.
For illustrative purposes only.

One step away from greater peace of mind

Enjoy the sense of relief that comes from being prepared for unexpected expenses. When you complete your Digital Advisor investor profile, you’ll not only get access to the Rainy Day Tool, you’ll also get personalized investment management, retirement planning, and other powerful financial planning tools. So why not get started now?
Complete my profile
Whenever you invest, there’s a chance you could lose the money.
1Source: Bankrate. Bankrate’s 2024 Annual Emergency Savings Report. 2024. 

2Taxes: Taking money from your retirement account can affect how much you’ll have to pay in taxes. You’ll owe taxes on pre-tax money. You won’t owe taxes on Roth earnings as long as you are age 59½ or older and it’s been at least five years since your first Roth contribution. If required by law, Vanguard will withhold some taxes for you. You may need to pay a 10% federal penalty tax if you take money out early.

Vanguard Digital Advisor's and Vanguard Personal Advisor’s services are provided solely by Vanguard Advisers, Inc. (VAI), a registered investment advisor. Please review the Vanguard Digital Advisor and Personal Advisor brochure for important details about these services. Vanguard Digital Advisor’s and Personal Advisor's financial planning tools provide projections and goal forecasts, which are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.