Emergency Fund Calculator
Calculate your ideal emergency fund size based on monthly expenses and risk factors.
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About the Emergency Fund Calculator
An emergency fund is liquid savings set aside for unexpected expenses — job loss, medical, car repair, urgent travel. Most planners recommend 3-6 months of essential expenses. This page covers how to size yours, where to hold it, and when to use it.
The Formula
Emergency fund target = Monthly essential expenses × N months (typically 3 to 6, sometimes more). Essential expenses include housing, utilities, food, insurance, transportation, minimum debt payments — not discretionary spending.
Worked Example
Monthly essentials: rent $1,800, utilities $200, groceries $600, insurance $300, transport $400, debt minimums $300 = $3,600. At 4 months coverage: $14,400. At 6 months: $21,600.
How big should yours be?
3 months: dual-income household, stable industry, easy job replaceability. 6 months: single income, more specialised role, longer typical job search. 12 months: self-employed, highly variable income, sole earner with dependents.
Where to keep it
A high-yield savings account (HYSA) — currently 4-5% APY at most online banks. Money market funds with check-writing are also fine. NOT in stocks (too volatile), NOT in a 401(k) (penalties for early withdrawal), NOT in a CD beyond 6 months (locked up).
What counts as an emergency
Truly unexpected, urgent, and necessary. Job loss — yes. Car repair to keep going to work — yes. Medical bill — yes. New TV because yours broke — usually no. Vacation deal — definitely no.
Common Mistakes
- Keeping emergency fund in checking earning 0%. The 4% APY difference on $20,000 is $800/year.
- Building emergency fund before getting employer 401(k) match. Get the free money first.
- Tapping the fund for non-emergencies, then not replenishing it.
Frequently Asked Questions
Should I pay off debt or build emergency fund first?
Build a starter $1,000-2,000 fund first, then attack high-interest debt, then complete the full 3-6 month fund.
Should the fund grow with inflation?
Recompute annually. If expenses rose, increase the target. HYSA interest helps but won't fully offset inflation.
This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Consult a licensed professional before making significant financial decisions.