Budget & Goals
Emergency Fund
Size an emergency fund against what you actually have to keep paying, and see how long it takes to build
About the Emergency Fund calculator
Size an emergency fund against your real fixed costs rather than a rule of thumb. Adjusts for job stability, dependants, insurance cover and existing EMIs.
How the maths works
Emergency Fund Target
Target = Essential monthly outgo x months of cover- Essential monthly outgo
- Rent or EMI, utilities, groceries, school fees, insurance premiums, transport, medicines. Not holidays, not subscriptions, not dining out.
- Months of cover
- 3 months for a stable salaried job with a second income in the household; 6 for a single-income household; 9 to 12 if you are self-employed, on commission, or in a volatile sector
- Add for dependants
- One extra month per dependant is a reasonable adjustment
- Add for weak insurance
- If health cover is thin, the fund is carrying that risk instead
A worked example
Single-income household with a home loan
| Home loan EMI | ₹38,000 |
| Other essential costs | ₹42,000 |
| Months of cover | 6 |
| Already saved | ₹1,50,000 |
Target ₹4,80,000, of which ₹1,50,000 exists - a shortfall of ₹3,30,000. Saving ₹25,000 a month fills it in about 14 months. Hold roughly one month in a savings account and the rest in a liquid fund or a sweep-in deposit.
How to use it
- List your essential monthly outgo, including every EMI
- Choose the months of cover your situation calls for
- Enter what you have already set aside for emergencies
- Enter what you can add each month
- Read the target, the shortfall, and the date it is fully funded
What it accounts for
- Sized on essential costs, not total spending, so the target stays reachable
- Adjusts the months of cover for job stability and dependants
- Separates the fund into an instant-access tier and a one-to-seven-day tier
- Shows how long the target takes to build at your current savings rate
- Accounts for EMIs, which are the costs that do not pause when income does
Why it is worth working out
- Stops an emergency turning into credit card debt at 40%
- Gives a defensible number instead of an anxious guess
- Makes clear the fund is for income loss and medical shocks, not for a phone
- Shows when the fund is complete, so surplus savings can move to investments
Questions people ask
How many months of expenses should an emergency fund cover?
Three months for a stable salaried job in a two-income household, six for a single-income household, and nine to twelve if you are self-employed, on commission, or in a volatile sector. Add a month for each dependant.
Should the fund be based on income or expenses?
Essential expenses, including every EMI. Rent, utilities, groceries, school fees, insurance premiums, transport and medicines. Not holidays or dining out — the fund is there to keep you solvent, not comfortable, and sizing it against total spending makes it so large that people never finish building it.
Where should I keep an emergency fund?
Split it. About one month in a plain savings account for instant access, and the rest in a liquid fund or a sweep-in deposit that reaches you within a day or two. Do not put it in equity, do not lock it in a long FD, and do not treat a credit card limit as a substitute.
Should I invest instead, given the low return?
The return is not the point. An emergency fund is insurance against having to sell investments at a bad moment or borrow at 40%. Paying a couple of percentage points of forgone return for that is not a bad trade; it is the trade.
Read more on this
- Your health insurance will reject the claim you need most, unless you read page 47 — Health insurance brochures show the sum insured. The policy document shows the sub-limits, co-payments, waiting periods, and exclusions that determine what you actually get. Here is how to read the parts that matter.
This calculator is for information and education. It is not financial advice — see the disclaimer.