Emergency Fund: How Much Should You Save?

An emergency fund is your financial safety net—money set aside to cover unexpected expenses or income loss. It's one of the most important foundations of financial security, protecting you from going into debt when life throws curveballs.

How Much Should You Save?

The standard recommendation is 3-6 months of expenses. However, the right amount depends on your situation:

• 3 months: If you have stable income, low expenses, and good job security
• 6 months: If you have variable income, high expenses, or work in an unstable industry
• 9-12 months: If you're self-employed, have irregular income, or are planning a major life change

Calculate Your Emergency Fund

To determine your target, calculate your essential monthly expenses:

• Housing (rent/mortgage)
• Utilities
• Food
• Transportation
• Insurance
• Minimum debt payments

Multiply by the number of months you want to cover. For example, if your essential expenses are $3,000/month and you want 6 months of coverage, your emergency fund target is $18,000.

Where to Keep Your Emergency Fund

Your emergency fund should be easily accessible but separate from your checking account. Consider:

• High-yield savings account: Earn interest while keeping money accessible
• Money market account: Slightly higher interest, still accessible
• Separate savings account: At a different bank to reduce temptation to spend

Don't keep it in: Checking accounts (too easy to spend), investment accounts (market risk), or CDs (not accessible enough).

Building Your Emergency Fund

Start small and build consistently:

• Start with $1,000: Get a mini emergency fund first to cover small unexpected expenses
• Automate savings: Set up automatic transfers to your emergency fund each month
• Use windfalls: Put tax refunds, bonuses, or gifts toward your emergency fund
• Cut expenses: Find areas to reduce spending and redirect that money to savings

When to Use Your Emergency Fund

Use your emergency fund only for true emergencies:

• Job loss
• Medical emergencies
• Major car or home repairs
• Unexpected travel for family emergencies

Don't use it for: Planned expenses, vacations, shopping, or non-essential purchases.

Calculate Your Emergency Fund

Use our free Emergency Fund Calculator to determine your target amount, see how long it will take to reach your goal, and plan your savings strategy.

Use Emergency Fund Calculator →