Build an emergency fund of 3 to 6 months of living expenses first, and keep it where you can withdraw it at any time

Cost

Free. The price is that this money gives up higher returns, and can only sit in a demand deposit, a money market fund, or a deposit you can withdraw at any time. The hard part is not touching it while you save.

What you get

With an emergency fund, when you lose your job or get sick you don't have to borrow, and you don't have to sell investments at a loss. For the annualized rates on consumer loans and on credit card minimum payments, see §5.7 (don't make only the minimum credit card payment). Money in a bank is protected by deposit insurance, with a maximum payout of 500,000 (50万) CNY at the same bank (China, 2015)

Notes

"3 to 6 months" is a widely shared rule of thumb. No official or academic original source was found, so it is marked C. Base the amount on your own fixed monthly spending, not on your income. Under the new anti-money-laundering measures in effect since January 1, 2026, the old rule that an individual depositing or withdrawing more than 50,000 (5万) CNY in cash must register the source of the funds is gone. The new measures ask banks to learn the source and purpose of funds when the money-laundering risk is higher, and no longer ask everyone as a blanket rule. Even if a bank restricts a transaction, it must still guarantee basic, necessary financial services such as medical care and social security. You can pay medical bills by transfer or card, without withdrawing cash first. This is not investment advice.

Evidence grade

C : The author's experience or common practice, without direct literature.

Sources

1. State Council (2015). Deposit Insurance Regulations [in Chinese] (State Council Order No. 660, Article 5). https://www.gov.cn/zhengce/content/2015-03/31/content_9562.htm
2. People's Bank of China, National Financial Regulatory Administration and China Securities Regulatory Commission (2025). Measures for the Administration of Customer Due Diligence and the Retention of Customer Identity Records and Transaction Records by Financial Institutions [in Chinese] (Order [2025] No. 11, Articles 7, 28 and 52; in effect from January 1, 2026). https://www.pbc.gov.cn/tiaofasi/144941/144957/5916164/index.html
3. Office of the Financial Commission of the CPC Shanghai Municipal Committee (2025-12-01). The People's Bank of China and two other agencies issue new rules; banks no longer ask "one size fits all" questions when you withdraw money [in Chinese]: "The document deletes 'individuals depositing or withdrawing more than 50,000 CNY in cash must register the source of the funds'". https://jrj.sh.gov.cn/ZXYW178/20251201/1da352ee5150414b8db1ce248f4e37c6.html

Translated from the Chinese original. Original book, section 5, tip 27. This section is about money and spending. It is general information, not financial or investment advice. Content may be out of date and rules differ by place. When you actually deal with an agency, a doctor or a court, follow what local officials, doctors and lawyers tell you. Disclaimer