Calculate how much you should save based on your income, expenses, employment type, and personal risk factors
Your financial safety net for life's unexpected challenges
An emergency fund is a dedicated savings account that covers 3-12 months of essential living expenses. It protects you from financial disasters when unexpected expenses arise, such as job loss, medical emergencies, major home repairs, or car breakdowns.
Without an emergency fund, unexpected expenses force you to rely on high-interest credit cards, loans, or even retirement account withdrawals (with penalties and taxes). An emergency fund gives you peace of mind and financial stability.
Financial experts universally agree: building an emergency fund is the FIRST step in any solid financial plan, even before paying off debt or investing. Here's why:
When emergencies arise, you have cash available instead of putting expenses on high-interest credit cards, preventing a cycle of debt.
Knowing you have a financial cushion significantly reduces anxiety about unexpected expenses and gives you confidence in your financial future.
With an emergency fund, you won't have to raid your retirement accounts, home down payment savings, or investment portfolios when unexpected costs arise.
Financial security gives you options during career transitions, job negotiations, or when considering entrepreneurship opportunities.
Most financial experts recommend saving 3-6 months of essential living expenses. However, your ideal amount depends on several personal factors:
Base your emergency fund on essential expenses only, not your total spending:
Include:
Exclude:
Your emergency fund needs to be safe, accessible, and earning some interest. Here are your best options:
Note: Rates change frequently. Compare current rates at your bank or use comparison sites like Bankrate or NerdWallet.
Similar to high-yield savings but may offer check-writing ability.
This "starter fund" covers most minor emergencies while you work on debt payoff or other goals. Achievable in 2-4 months for most people.
Schedule automatic transfers from your checking account to your emergency fund savings account every payday. "Pay yourself first" before spending on anything else.
Direct bonuses, tax refunds, gifts, or any unexpected income straight to your emergency fund. This can cut your timeline in half.
Temporarily cut one non-essential expense (dining out, subscriptions, entertainment) or start a side hustle to accelerate your progress.
Once you have your mini fund, continue building to your full 3-6 month target using the calculator above to track progress.
Some situations require careful consideration:
Use our suite of free calculators to master your finances
Calculate your ideal emergency fund size based on your personal financial situation
Include only essential expenses that you must pay every month: rent/mortgage, utilities, groceries, insurance, minimum debt payments, transportation, and healthcare.
Pro tip: Review your last 3 months of bank statements to calculate an accurate average of your essential monthly expenses.
