Move your emergency fund out of checking and into Vanguard’s Treasury money market fund, from blank screen to earning interest.
Written for first-timers, including business owners who already have a Roth IRA at Vanguard. Follow the eight steps in order and you’re done.
Why bother moving your cash
Money in checking typically earns close to nothing while prices keep rising. Cash you need to keep safe, like an emergency fund, a home down payment, or money set aside for taxes, can still earn a real return without going anywhere near the stock market.
That’s roughly what $100,000 earns in a year in VUSXX at early October 2026 rates (a 7-day yield of about 3.8%, after the fund’s 0.07% fee). Most of that interest is also free of state income tax because it comes from U.S. Treasuries.
| Typical checking | VUSXX | |
|---|---|---|
| Yield | about 0.01% | about 3.8% (after the fund’s fee) |
| Interest on $100,000 for a year | about $10 | about $3,820 |
| Annual fund fee on $100,000 | none | about $70, already netted from the yield |
| Federal income tax | taxable | taxable |
| State income tax | taxable | mostly exempt |
| Minimum | none | $3,000 to start, then $1 |
| Getting your money | immediate | sell any business day; in your bank in about 2–3 business days |
Yields change daily and follow Federal Reserve rate moves. Check the current 7-day SEC yield on Vanguard’s fund page before you buy.
The whole process at a glance
Setting up happens in three phases. Most people finish phase two and stop, which leaves their money in the settlement fund instead of in VUSXX.
1. Open
Create a brokerage account, verify your identity, name a beneficiary.
2. Fund
Move cash from your bank and wait for it to arrive.
3. Invest
Buy VUSXX. This is the step that gets you the Treasury yield and the state tax break.
Where your money actually goes
Your deposit doesn’t go straight into VUSXX. It stops in a holding area first, and coming back out works the same way in reverse.
1–3 days
Buy
Your timeline
- Day 1Open the account and start the transfer (steps 1–5)
- Days 2–3Money travels from your bank (step 6)
- Day 3–4Cash arrives. Buy VUSXX (step 7)
- Day 5Confirm it’s in VUSXX (step 8)
The eight steps
Gather what you need
- Social Security number
- Driver’s license or other photo ID
- Employment details: employer (or your business) name, address, and your occupation
- Bank routing number and account number
- Beneficiary’s name, birth date, and SSN
Why this matters
The application asks for all of this. Having it ready means you finish in one sitting instead of stopping to search for paperwork.
Already have a Vanguard Roth IRA?
You can use the same login, but you still need a separate brokerage account for this cash. Most of your details carry over, so steps 2–4 take just a few minutes.
Open an individual brokerage account
- Go to vanguard.com and click Open an account
- Choose Brokerage account, then Individual (or Joint if you share the emergency fund with a spouse)
- If offered Vanguard Digital Advisor or another advice service, decline and choose to manage it yourself
Why this matters
This is regular, taxable money you can reach any time, with no age rules or penalties. An advice service would add a yearly fee for managing a fund that doesn’t need managing.
Why not just keep the cash in your Roth IRA?
Your Roth has a yearly contribution limit, and every dollar of that space is worth saving for long-term growth. Emergency money needs to come out without any question about tax rules. Keeping it in a regular brokerage account gives you both: the Roth stays invested for retirement, and the cash stays ready.
Enter your details and secure your login
- Enter name, address, birth date, SSN, and citizenship
- Answer the employment and affiliation questions, usually “No” unless you work for a brokerage firm or are an officer or 10% owner of a public company
- Keep the default settlement fund: Vanguard Federal Money Market Fund (VMFXX)
- Create a username and password, and turn on two-step verification
Why this matters
Federal rules require Vanguard to verify who you are. The settlement fund is where cash waits before and after every trade. Two-step verification matters more on an account built to send money to your bank quickly.
Choose e-delivery and name a beneficiary
- Select electronic delivery for statements, tax forms, and documents
- Add a transfer-on-death (TOD) beneficiary and the percentage they receive
- Add a contingent (backup) beneficiary if you’d like
Why this matters
E-delivery avoids paper-statement fees. A brokerage account doesn’t pass to anyone automatically. A TOD beneficiary receives it directly, without going through probate.
Link your bank and move the cash
- Add your bank using its routing and account numbers
- Enter the amount you’re moving, such as $100,000
- Choose One time; you can set up recurring transfers later
- Review and submit
Why this matters
A $100,000 transfer can run into daily limits at your bank or at Vanguard. Check both limits before you start. If either is lower, split the transfer across a few days or ask your bank about a wire, which usually arrives the same day for a small bank fee.
Submit
Let the money settle
- Watch for your deposit in the settlement fund (VMFXX)
- Wait until it shows as available, not pending
Why this matters
You can’t buy VUSXX with money that hasn’t arrived. The good news: while it sits in the settlement fund, it’s already earning money market interest, far more than checking pays.
VMFXX vs. VUSXX: why make the switch?
Both are low-cost Vanguard money market funds, and your cash earns interest in either one. VMFXX holds a mix of government securities and repurchase agreements, so less of its income is free of state tax. VUSXX holds almost entirely U.S. Treasuries, so most of its income is exempt from state and local income tax. That matters most in states with higher income taxes, like Maryland and New York.
Buy VUSXX
- Go to Buy & Sell, then Buy
- Search “VUSXX” and select Vanguard Treasury Money Market Fund
- Enter the amount, at least $3,000 for your first purchase, and pay from your settlement fund
- Set dividends to Reinvest
Why this matters
This is the step that moves your cash into Treasuries and gets you the state tax break. There’s no commission. Shares stay at $1.00 each, so reinvested interest shows up as a growing balance.
Place order
Confirm and know how to get it out
- After 1–2 days, open Balances & holdings
- You should see VUSXX, with the settlement fund near $0
- Optional: set up an automatic monthly investment into VUSXX to keep building your cash reserve
- Save the 1099-DIV Vanguard sends early in the year
Why this matters
Checking catches an order that didn’t go through. Knowing the way out before you need it means an emergency isn’t the first time you try.
How the state tax break works
Vanguard publishes that percentage each January with its tax information. Your federal return still includes all of it as ordinary income.
Getting your money back out
When you need the cash, the path runs in reverse. Plan on about two to three business days from your click to money in your bank.
business day
1–2 days
For a big, scheduled payment like a home closing, sell about a week ahead so the money is in your bank with room to spare. If you know the exact date months in advance, short-term Treasury bills bought at auction in the same account, such as 4-week or 6-week bills, can lock in a rate until that day.
Is it safe? VUSXX invests in short-term U.S. Treasury securities and aims to keep its share price at $1.00, but it’s an investment, not a bank deposit, and it isn’t FDIC insured. Holdings in a Vanguard brokerage account are covered by SIPC if the brokerage itself fails. That protects against a firm failure, not against investment losses.
Where VUSXX fits in your plan
An emergency fund, a home down payment or tax payment due within a year, and cash waiting to be invested. Keep it next to your Roth IRA at Vanguard so everything is in one place.
Long-term retirement money. Over decades, cash usually just keeps pace with inflation. Your Roth IRA belongs in a diversified fund, like a target-date fund.
Before you finish: quick checklist
- Individual brokerage account opened as self-directed
- Two-step verification turned on
- E-delivery selected
- TOD beneficiary named
- Cash arrived in the settlement fund
- VUSXX purchased (at least $3,000)
- Dividends set to reinvest
- Settlement fund near $0
Not sure how much cash to keep?
We’ll help you size your emergency fund, plan cash for a home purchase or tax payments, and decide what belongs in a money market fund, Treasury bills, or your Roth IRA.
Or call 516-261-2171
Sources
- Vanguard: Money market funds, minimums and expense ratios
- Vanguard Treasury Money Market Fund summary prospectus
- Vanguard: VUSXX fund profile and current yield
This guide is for general educational purposes and is not individual investment, tax, or legal advice. Yields and fees shown were current as of October 2026 and will change, and Vanguard’s screens and wording change from time to time. A money market fund is not insured or guaranteed by the FDIC or any other government agency, and it’s possible to lose money.