Emergency Fund

An emergency fund is cash you can reach within a day, sized to cover essential expenses if your income stops. The standard advice is three to six months of essentials, but the right number depends on how stable your income is, how many people rely on it, and how quickly you could find replacement work.

How the target is calculated

Target = monthly essential expenses × months of cover. Essential expenses are what you must pay to keep your life running — rent or mortgage, utilities, groceries, insurance, minimum debt payments, transport, childcare — not your full spending. The calculator then subtracts what you already have set aside and, given a monthly contribution, tells you how many months it will take to close the gap. Interest is deliberately ignored: the fund should sit in an instant-access account where the rate is a bonus, not part of the plan.

When to use this calculator

Use three months as the floor if you have a steady salaried job and a second household income. Move toward six months if you are the sole earner, have children, or work in an industry with long hiring cycles. Freelancers, contractors and commission-based earners should plan for six to twelve, because their emergencies are more often a slow quarter than a single event. Re-run the numbers whenever rent, a mortgage payment or family size changes.

Worked example

Essential expenses of $3,200 a month and a six-month target give a fund of $19,200. With $5,000 already saved and $600 a month going in, the gap of $14,200 closes in about 24 months. If that feels too slow, the calculator shows the intermediate milestone: three months of cover ($9,600) is reached in seven months, which is a sensible first target before building the rest.