<prompt> Human: Your emergency fund does not always have to sit in a savings account earning sub-1 interest. Some people advocate a tiered E-fund which diversifies your fund into different options..GraphicRarely does an emergency require you to call-in your entire 3-6 months expenses all at once. In these emergencies unexpected expenses you can utilize your most liquid assets to pay immediate expenses and call-in less liquid assets to cover expenses in the near future.Less-liquid options often have higher rates of return, meaning youll come out ahead if you dont have an emergency. If you DO have an emergency youre still covered but you need to be smart about where and when you withdraw the money needed.Similarly, if you are disciplined you can use credit cards to float emergency expenses up to a month; in the meantime you have time to pull out money from less liquid accounts.Id advocate for an E-fund distribution across cash, savings, checking, gov. bonds or CDs, and if you have a lot saved low-risk diversified investments like a Total Bond Index.Regardless of where you keep your E-fund, you want two things: 1The money must be ACCESSBILE when you need it. You have to be able to withdraw it when an emergency pops up so it cant be tied up in an I-bonds 1yr holding period, or a locked-in CD. 2You dont want to be forced to withdraw money when the valuation has dropped because the market crashed at the same time you lost your job and your roof needs repair. It should be in LOW-RISK investments and weighted more towards assets that produce reliable returns over high interest rates.At its core your E-fund is SELF-INSURANCE against the potential losses you face when you have unexpected expenses. The interest rates will NOT be great, but compared to 20 APR from a credit card bill you cant pay, its a lot better. If youre smart and you have a plan, however, you can do a little better than just keeping a lump sum in a savings account and losing out to inflation.tl:dr Album - diversify your E-fund across cashcheckingsavingsbondsCDsinvestments  <response>: Similarly, if you are disciplined you can use credit cards to float emergency expenses up to a monthLots of people dont take credit cards landlords, contractors, car dealers, etc its still a good idea to keep some cash. 