Emergency Fund Calculator
Calculate how large your emergency fund should be based on your essential monthly expenses. See how long it will take to reach your target at your current saving rate.
What is an emergency fund?
An emergency fund is a dedicated cash reserve held in a liquid, accessible account (such as a high-yield savings account) to cover unexpected expenses or income disruption. Its purpose is to prevent you from taking on high-interest debt or liquidating investments at unfavourable times when unexpected costs arise.
Common scenarios that draw on emergency funds: job loss, medical expenses not covered by insurance, car repairs, home repairs, and unexpected travel. The fund should cover essential living costs — not discretionary spending.
How many months of expenses should I save?
The conventional recommendation is 3–6 months. The right amount for you depends on your circumstances:
- 3 months — minimum target for employed individuals with stable income, low dependants, and marketable skills in high-demand fields
- 6 months — recommended for most people, especially those with dependants, single-income households, or in specialised or volatile industries
- 9–12 months — suitable for self-employed individuals, freelancers, business owners, or those with highly specialised skills where finding new work may take several months
Where should I keep my emergency fund?
- High-yield savings account (HYSA) — the most common choice. Earns meaningful interest while remaining fully accessible. FDIC/FSCS insured in the US/UK up to standard limits.
- Money market account — similar to HYSA, sometimes with slightly higher rates or cheque-writing privileges.
- Short-term Treasury bills (T-bills) — higher yields than savings accounts, but slightly less liquid. Best for the portion of the fund beyond your immediate 1-month buffer.
Avoid keeping emergency funds in investment accounts (stock market volatility) or locked in fixed-term deposits where early withdrawal incurs penalties.
Frequently asked questions
Should I pay off debt or build an emergency fund first?
Build a small starter fund (1 month of expenses) first, then attack high-interest debt aggressively. Without any cash buffer, unexpected costs will force you back into debt — undoing your payoff progress. Once high-interest debt is cleared, rebuild the full 3–6 month fund before focusing on investing.
Should I include my credit card limit as part of my emergency fund?
No. Credit cards are debt, not savings. Using credit cards in an emergency means paying interest on top of the original expense, worsening your financial position. The emergency fund should be liquid cash that costs nothing to access.
