Emergency Fund Calculator

Why an emergency fund comes first

An emergency fund is money set aside for the events that arrive without warning — job loss, a medical bill, a failed boiler, an urgent flight. Its purpose is not to earn a return but to stop an unexpected cost from becoming expensive debt. Without one, a single bad month typically ends on a credit card at 20%, and the cost of that event carries on long after the event itself has passed.

The formula behind it

The target is monthly expenses × months of cover, and the shortfall is that target minus what you already hold. With expenses of 2,200 and a six-month target, the fund needs 13,200; if you have 4,000 saved, you are 9,200 short. Base the calculation on essential expenses — housing, food, utilities, transport, insurance, minimum debt payments — not your full discretionary spending.

How to use this calculator

Enter your monthly expenses, the number of months of cover you want and your current savings. The result shows the target amount and how much more you need. Divide that shortfall by the months you are willing to take, and you have a monthly savings figure you can act on.

How much, and where to keep it

Three months is a common minimum for a stable salaried job with two incomes in the household. Six months suits a single income, and freelancers or those in volatile industries often hold nine to twelve. Keep the money instantly accessible in a separate high-interest savings account — not invested, where a market fall could coincide precisely with the moment you need it, and not in your current account, where it quietly gets spent.