How much should an emergency fund be?
The basic formula is emergency fund = essential monthly expenses × number of months. The tool only counts rows ticked “Essential”, because in a month with no income most people cut flexible spending first.
How to calculate it (example)
| Essential expense | Per month |
|---|---|
| Rent | 1,500 |
| Groceries and household | 600 |
| Utilities, internet, phone | 250 |
| Transport | 300 |
| Debt and card payments | 250 |
| Total | 2,900 |
A 6-month target is 2,900 × 6 = $17,400. With $13,000 you can use now, you cover 4.4 months of essentials and are $4,400 short. Press “Try with example numbers” above to see this example in the tool.
How many months of expenses?
There is no number that is right for everyone:
- 3–6 months is the common guideline. The UK’s MoneyHelper uses three to six months of essential outgoings (as cited by NS&I).
- The US Consumer Financial Protection Bureau (CFPB) does not set a number of months. It suggests basing your goal on the unexpected expenses you have actually had.
Aim higher than 6 months if:
- your income is irregular, for example freelance, self-employed or commission-based
- other people depend on you, or yours is the only income in the household
- it usually takes a long time to find work in your field
Why stress-test the target?
A target tells you how much to hold. It does not tell you whether that amount survives a real gap in income. On this page, scenario B starts as income stops for 6 months, then comes back, and C is the same with flexible spending cut by 30%.
What usually drains a reserve faster than expected:
- one-off bills that land during the gap, such as annual insurance or car tax
- costs that rise when you leave a job, such as health cover your employer used to pay. Add it as a new expense starting that month.
- income that comes back lower. Set B to −100% for 3 months, then add a smaller income row starting in month 4.
Where should you keep it?
The principle: available immediately, not exposed to price swings, and separate from the account you spend from, so it does not get used by accident. This tool does not recommend specific products. If some money takes days to withdraw or can lose value, do not count it as “money you can use now”.
What counts as “money you can use now”?
Only money you can actually use in the month you need it. If a lump sum arrives in a specific month, such as severance pay or a tax refund, enter it as a one-off amount received in that month instead of adding it to your starting money. That way you can see the months before it arrives.
To see how many months your savings last if income stops completely, use Savings runway. Every formula is on the Method page.