Emergency fund calculator

Step 1: essential monthly costs

Only what you cannot stop paying: housing, utilities, groceries, transport, insurance, minimum debt payments, essential childcare and medication. Leave out eating out, subscriptions and travel; in an emergency you would cut those.

Example with made-up numbers
Rent 1,100 · utilities 170 · groceries 450 · transport 150 · insurance 120 · minimum debt payments 110
Essential monthly costs: 2,100

Step 2: months of cover

• About 3 months: stable salary, two incomes in the household, no dependants, in-demand skills.
• About 6 months: one income, dependants, a mortgage.
• 6 months or more: freelancers, commission or seasonal workers, business owners, anyone whose income swings.

emergency fund = essential monthly costs × months of cover
2,100 × 3 = 6,300 · 2,100 × 6 = 12,600

Step 3: how long it will take

months to build = (target − already saved) ÷ monthly savings
Example: (6,300 − 900) ÷ 300 = 18 months

Eighteen months can feel long. Set a first milestone of one month of essential costs: it already covers most car repairs and appliance failures, and reaching it quickly keeps you going.

Speed it up

• Automate the transfer on payday.
• Send windfalls straight to the fund: tax refunds, bonuses, gifts, side income.
• Pause one or two discretionary categories until you reach the first milestone.
• Cancel subscriptions you do not use; see the subscription audit.

Debt or emergency fund first?

A common approach: build a small starter fund (one month or a fixed small amount), then attack high-interest debt, then finish the full fund. Without any buffer, the next surprise goes back on the card. See the debt payoff plan for the debt side.

Where to keep it

Somewhere safe, separate from your everyday account and available within a day or two, such as a savings account. Avoid anything that can lose value or lock up your money just when you need it.

Use it, then refill it

Use it only for real emergencies: job loss, urgent repairs, medical costs, essential travel. Holidays and planned purchases belong in sinking funds. After you use it, refilling it becomes your first savings goal.

A worked plan

With essential costs of 2,100 and a three-month target of 6,300, starting from 900: first milestone, one month of costs (2,100), reached in four months at 300 per month. Then pay down high-interest debt with most of the surplus while still adding 100 per month to the fund. Once the debt is gone, move the full amount back to the fund until it reaches 6,300.

Review the target once a year, or whenever rent or another essential cost changes.

Common mistakes

• Sizing the fund on your full salary instead of essential costs.
• Keeping it in your everyday account, where it gets spent.
• Investing it in something that can drop just when you need it.
• Never refilling it after using it.

General information, not financial, tax or legal advice. Examples use made-up numbers.