Emergency Fund Calculator

How the target is worked out

An emergency fund is cash set aside for unplanned expenses or a sudden loss of income. The calculator bases your target on essential spending, the costs you would still have to pay if your paycheck stopped: housing, utilities, groceries, insurance, transportation and minimum debt payments.

It multiplies that monthly figure by the number of months you choose, subtracts what you have already saved, and divides the rest by what you can add each month. The result is rounded up to whole months, and the progress bar shows how much of the target you already have.

A worked example

Say your essential costs are $2,400 a month, you want three months covered, you have $1,500 saved and can add $250 a month. Your target is $7,200 and you have $5,700 still to save, which takes 23 months. Raising your monthly saving to $400 cuts that to 15 months.

Aiming for six months instead doubles the target to $14,400 and leaves $12,900 to save, which would take 52 months at $250 a month. A first goal of one month, $2,400, would be reached in 4 months.

How many months to choose

The Consumer Financial Protection Bureau does not set a single figure. It says the amount you need depends on your situation, and suggests thinking about the most common unexpected expenses you have had in the past and what they cost. A widely used rule of thumb is three to six months of essential expenses.

Lean toward more months if your income is irregular, you are the only earner in your household, you work in an industry with frequent layoffs, or you have dependents. Fewer months may be enough if you have a second stable income in the household. If the full target feels out of reach, start with one month. The CFPB points out that even a small amount can provide some financial security.

Building and keeping the fund

The CFPB suggests setting up a recurring transfer so money moves from your checking account to savings automatically, or asking your employer to split your paycheck between two accounts. It also suggests saving all or part of a tax refund or other large check to build the fund faster.

Keep the money somewhere safe that you can reach quickly, but not so close that it gets spent on everyday things. The CFPB points to banks and credit unions as among the safest places to keep it, and a separate savings account makes it less tempting to spend. Decide in advance what counts as an emergency, such as an unplanned medical bill or a job loss, and refill the fund after you use it.

After the emergency fund

Once your fund is in place, the money you were putting into it can go toward other goals. The savings goal calculator shows how much to set aside each month for a specific target and date, such as a down payment or a new car.