No emergency fund? One setback costs you thousands.

How Much Should Your Emergency Fund Be?

The standard advice — save 3–6 months of expenses — is a starting point, not a precise answer. The right emergency fund size depends on your job security, number of income earners in your household, fixed obligations, and how quickly you could replace your income if needed. This calculator personalises the target based on your actual risk profile.

Being underfunded on your emergency fund is expensive in ways that aren't immediately obvious. Without adequate reserves, a single unexpected expense forces high-cost debt (credit cards at 20%+ APR, personal loans) or early investment account withdrawals that trigger taxes and penalties. The true cost of an undersized emergency fund is the interest and penalties paid when life inevitably throws a surprise.

The 3–6 Month Rule: Who Should Be at Each End

3 months is appropriate if: You have a stable government or tenured job, a second household income, highly marketable skills with short expected unemployment duration, and minimal fixed obligations (no dependents, low fixed debt).

6+ months is appropriate if: You're self-employed or freelance, work in a cyclical industry, have a single household income, high fixed obligations (mortgage, dependents), or work in a specialised field with longer typical job searches.

Where to Keep Your Emergency Fund

Your emergency fund should be in a high-yield savings account (HYSA) — not invested in the market, not in a chequing account earning 0.01%. Current HYSA rates of 4–5% mean a $20,000 emergency fund earns $800–$1,000/year in interest while remaining instantly accessible. The money should be liquid and stable — its job is not to grow aggressively, but to be there when you need it without losing value.