Emergency Fund Calculator

Cassidy HortonPersonal Finance Reviewer and Writer

Cassidy Horton is a finance writer covering banking, life insurance and business loans. She has worked with top finance brands including NerdWallet, MarketWatch and Consumer Affairs. Cassidy first became interested in personal finance after paying off $18,000 in debt within 10 months of graduating college. She later went on to triple her salary in two years by ditching her 8-to-5 job to write for a living.

Cassidy Horton

Cassidy HortonPersonal Finance Reviewer and Writer

Personal Finance Reviewer and Writer

Elizabeth AldrichDeputy Editor, Banking

With eight years of experience as a financial journalist and editor and a degree in economics, Elizabeth Aldrich has worked on thousands of articles within the realm of banking, economics, credit cards, investing, loans, personal finance and travel. Her work has been featured in Business Insider, The Motley Fool, Bankrate, Investopedia, LendingTree, Student Loan Hero, ValuePenguin, USA Today, Credit Karma, NASDAQ, Yahoo! Finance and more.

Fact Checked

Elizabeth Aldrich

Elizabeth AldrichDeputy Editor, Banking

Deputy Editor, Banking

Fact Checked

Updated: Jul 19, 2023, 8:16am

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

Life is unpredictable, and unexpected expenses can come up at any time. Whether it’s a sudden car repair, a medical emergency or a job loss, having an emergency fund can provide peace of mind and financial stability during difficult times.

Use this emergency fund calculator to determine how much you need to save and how long it will take to reach your goal. Enter your monthly expenses, and the calculator will give you a target savings amount. From there, you can adjust your savings strategy to meet your goal.

How To Calculate an Emergency Fund

Calculating your emergency fund can be broken down into a few simple steps. Here’s how to get started.

1. Calculate Your Monthly Expenses

Determine the right amount for your emergency fund by calculating your monthly expenses. This includes rent or mortgage payments, utilities, groceries, transportation, insurance premiums and any other recurring bills. Multiply this total by the number of months you would like to have covered by your emergency fund.

For example, if your monthly expenses are $3,000 and you want to save for three months, your emergency fund goal would be $9,000.

2. Evaluate Your Risk Factors

Next, evaluate your risk factors. If you have a stable job and income, you may be able to get by with a smaller emergency fund. However, if your income is unpredictable or you work in a volatile industry, you may need to save more. Additionally, if you have dependents, a mortgage or other financial obligations, you may need to save more to cover your expenses.

3. Consider Your Comfort Level

Finally, consider your comfort level. How much of a safety net do you need to feel financially secure? If it’s a standard three- to six-month emergency fund, that’s great. Make that your goal. But if your life obligations still leave you feeling vulnerable, up your emergency fund to an amount that feels right for you.

What Is an Emergency Fund?

An emergency fund is a financial safety net you can rely on when unexpected expenses or life events occur. Emergencies can include a sudden job loss, medical expenses, home repairs, car repairs and more.

By having an emergency fund, you can avoid going into debt or dipping into other savings, such as a 401(k) or kid’s college fund. An emergency fund is a crucial component of a healthy financial plan.

How Much Should I Have in an Emergency Fund?

The amount of money you should have in your emergency fund can vary depending on your personal and financial goals. As a rule of thumb, financial experts recommend having enough savings to cover three to six months’ worth of living expenses.

If you have a stable job with a regular income, you may be able to get by with three months’ worth of living expenses. However, if you have a more volatile income or are self-employed, you may want to aim for six months’ worth or more.

Other factors to consider include your level of debt, any dependents you have, and your overall financial goals. For example, if you’re planning to purchase a home, launch a business or start a family in the near future, you may want to save more aggressively to build up your emergency fund.

Where To Put an Emergency Fund

Once you have determined how much you need to save, it’s important to put your emergency fund in a safe and accessible place. Here are some options:

High-Yield Savings Account. One of the most popular options for storing an emergency fund is a high-yield savings account. These accounts typically offer higher interest rates than traditional savings accounts, and they are FDIC-insured, which means your money is protected up to $250,000.
Money Market Account. Another option is a money market account. These accounts typically offer higher interest rates than savings accounts, and they often include check-writing privileges or ATM access. However, you might need a larger opening deposit to get started.

Pro Tip

It’s unwise to keep your emergency fund in a certificate of deposit (CD). While CDs typically offer higher interest rates than savings accounts, they’re not as accessible—you’ll generally pay a penalty fee if you dip into your money before a CD matures.

How To Build an Emergency Fund

Building an emergency fund can take time, but it’s an important step in securing your financial future. Here’s how to do it.

1. Set a Goal

Start by setting a specific goal for how much you want to save. If you’re starting from scratch, aim for a smaller goal—such as saving $500—and then work your way up to a larger goal.

2. Automate Your Savings

Automating your savings is one of the easiest ways to build your emergency fund. It typically involves setting up a monthly automatic transfer from your checking account to your savings account. That way, you won’t even have to think about saving—it will happen automatically.

3. Cut Back on Expenses

Another way to build your emergency fund is to cut back on expenses. You don’t have to cut out everything you enjoy, but look for easy money leaks you could plug: meals at restaurants, unused subscriptions, overpriced car insurance, etc. Funnel any money you save into your emergency fund.

4. Use Windfalls Wisely

When you receive unexpected money, such as a tax refund or a bonus at work, resist the urge to spend it right away. Instead, put it towards your emergency fund to help you reach your savings goal faster.

5. Keep Your Emergency Fund Separate

To avoid the temptation to dip into your emergency fund for non-emergency expenses, keep your emergency fund in a separate account from your other savings. This will also make it easier to track your progress toward your savings goal.

You can also automate your savings to make it easier to reach your goal over time. Keep in mind you may have to adjust your emergency fund as your circumstances change, but you can use the emergency fund calculator above to get started.

Building an emergency fund may take time, but with each dollar you save, you’re buying yourself financial security. Stay committed to your goal and celebrate your progress along the way.