Last updated: Jul 13, 2024

Emergency Fund Calculator

Q: Can the emergency fund be negative?

No , the emergency fund amount cannot be negative. This fund is the amount of money you plan to save , so it must be a positive number.

Q: What is the optimal emergency funding?

The optimal emergency funding usually is within 3 to 6 months for your monthly expenses . It depends on the risk you can take and personal circumstances.

Q: What is emergency funding used for?

The emergency fund is the amount of money that you save to sustain your living in extreme circumstances such as losing your job . With these funds, you can live for a certain number of months with just your savings.

Q: How much emergency fund should I have with $2500 monthly expenses?

You should have an emergency fund of between $7,500 and $15,000 . That's because an emergency fund of about 3 to 6 months of monthly expenses is the most common choice.

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Wei Bin Loo

A strategy consultant graduated from Imperial College London with abundant experience advising companies on analytics strategy and transformation projects. Having passed his CFA Level 2 with his results ranked above the 90th percentile, he possesses a broad expertise in the finance and investment space. He is also passionate about product management and is currently a Certified Scrum Product Owner (CSPO). He is a Harry Potter fanatic and a chess and basketball enthusiast. See full profile

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Physicist at the Institute of Nuclear Physics in Kraków interested in magnetism and always ready to explain everything to everyone in simple terms. He is currently working on adding more scientific papers to his collection, accompanied by his son and another baby on its way. A perfectionist with an acute eye for detail, he has a unit converter in his brain and uses it to compare prices at the supermarket. Loves peace and quiet, especially during hiking. See full profile

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Adena Benn is an Information Technology teacher with a degree in Computer Science. She has been teaching high schoolers since 1996 and loves everything computers. She loves problem-solving, so creating calculators to solve real-world problems is her idea of fun. She writes children's stories, is a seamstress, and is an avid reader. In her spare time, she travels and enjoys nature. See full profile

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Table of contents

What is an emergency fund? Emergency fund definition The emergency fund calculator and example How much emergency funding should I have?FAQs

With this emergency fund calculator, we aim to help you calculate the amount of emergency funds you need to save.

We have written this article to help you understand the emergency fund definition and the emergency fund calculation. We will also demonstrate some examples to help you understand the topic in more detail.

What is an emergency fund? Emergency fund definition

The emergency fund is the amount of money you plan to save so that you can sustain your living if extreme cases happen. For instance, if you lose your job, it would be a disaster if you do not have savings to pay your rent. To understand more on this topic, please visit our savings calculator and net effective rent calculator.

However, if you save three months of the amount you usually spend on monthly expenses, you will be able to cope with this kind of emergency better.

The emergency fund calculator and example

To understand how much emergency fund you need, let's take Cindy as an example:

Name: Cindy
Monthly expense: $2,500
Desired number of months of savings: 6

You can calculate the emergency fund amount in three steps:

Determine the amount of money you usually spend on your monthly expenses:

The first step is to understand your monthly expenses. For Cindy, her monthly expenses is $2,500.
Determine the number of months of saving you desired:

The next step is to determine the number of months of savings for your monthly expenses that you need. This is solely based on your risk appetite and personal circumstances. However, it is usually recommended to have at least 3 to 6 months of savings.

In Cindy's case, she would like to have 6 months of savings.
Calculate the emergency fund amount needed:

The last step is to calculate the emergency fund amount, which can be achieved by using the formula below:

emergency fund = monthly expense × number of months

Thus, the emergency fund needed for Cindy is $2,500 × 6 = $15,000.

Use the emergency fund calculator to quickly get the same result.

How much emergency funding should I have?

The amount of emergency fund you need entirely depends on your risk appetite and your personal circumstances. For instance, a person of age 20 will need less emergency funds compared to a 50 years old person. This is because you can take on more risks when you are young.

However, it is common to have an emergency fund of about 3 to 6 months of monthly expenses. This means that you can at least sustain yourself for at least 3 months even without any money going into your pocket.

FAQs

How can I calculate the emergency fund amount?

You can calculate the emergency fund amount in three steps:

Determine your monthly expenses.
Determine the number of months of saving you desired.
Apply the emergency fund formula.

emergency fund = monthly expense × number of months

Can the emergency fund be negative?

No, the emergency fund amount cannot be negative. This fund is the amount of money you plan to save, so it must be a positive number.

What is the optimal emergency funding?

The optimal emergency funding usually is within 3 to 6 months for your monthly expenses. It depends on the risk you can take and personal circumstances.

What is emergency funding used for?

The emergency fund is the amount of money that you save to sustain your living in extreme circumstances such as losing your job. With these funds, you can live for a certain number of months with just your savings.

How much emergency fund should I have with $2500 monthly expenses?

You should have an emergency fund of between $7,500 and $15,000. That's because an emergency fund of about 3 to 6 months of monthly expenses is the most common choice.