Formula
Target = Essential monthly expenses × Months of coverage
Months to goal = (Target − Already saved) ÷ Monthly saving
Months to goal = (Target − Already saved) ÷ Monthly saving
Example: Essential expenses of $3,350 a month ($1,500 housing, $250 utilities, $500 groceries, $350 transportation, $300 insurance, $250 debt, $200 other) × 6 months = a $20,100 target. With $5,000 saved and $500 a month, you need about 31 more months.
Building it faster
- Automate a transfer on payday so saving happens first.
- Put tax refunds, bonuses and windfalls straight into the fund.
- Keep it in a separate account so it is not spent by accident.
Saving for a planned expense instead? Try the sinking fund calculator.
Frequently asked questions
How much should be in an emergency fund?
The common guideline is 3 to 6 months of essential expenses. Choose 6–12 months if you are self-employed, the only earner, or work in a volatile industry.
Which expenses should I include?
Only essentials you would still pay in a crisis: housing, utilities, groceries, transportation, insurance, minimum debt payments and necessary medical costs. Leave out dining out, subscriptions and travel.
Where should I keep an emergency fund?
Somewhere safe and easy to reach: a high-yield savings account or money market account. Avoid stocks, which may be down just when you need the money.
Should I pay off debt or build an emergency fund first?
Many planners suggest a small starter fund (for example $1,000–2,000) first, then attacking high-interest debt, then building the full fund.