Emergency Fund Calculator
Table of contents
What is an emergency fund? Emergency fund definitionThe emergency fund calculator and exampleHow much emergency funding should I have?FAQsWith 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.
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.