Emergency Fund Calculator | Calculate How Much to Put in Emergency Fund (2022)


What Is an Emergency Fund?

An emergency fund is a special reserve of liquid or cash assets that you have saved to help you manage financially through an unforeseen emergency or life event. As we all know, life is unpredictable, so it’s important to plan ahead for those unexpected surprises that inevitably happen. You can create more financial security for yourself by knowing how much money you might need in the short-term to survive the sudden loss of your job, an unexpected injury or illness or even a large expense like a major car repair or emergency home maintenance. Transmission or engine trouble with your car can add up quickly, and needing a new roof or septic system for your house could cost you tens of thousands of dollars.

Remember that having an emergency fund is important throughout your lifetime, whether you are young or old —including your retirement years. Learn more about why you may need an emergency fund in retirement.

How Much Money Should You Have in an Emergency Fund?

A good rule of thumb is to save between three to six months of living expenses in your emergency fund. However, everyone’s financial situation is different, so you may want to save more than that. If you are self-employed and experience fluctuations in your monthly income or if you are married with several children — dependents who rely on you exclusively for income — it could be helpful to save nine to 12 months of living expenses, to give yourself some extra financial breathing room. The duration of living expenses is completely up to you. Because your emergency fund needs to remain liquid, it will most likely be earning a low interest rate (between 1% and 2% in a savings or money market account), which is often less than the rate of inflation (e.g., the rate of inflation in 2019 was 2.3%). You may be losing out on earning potential with money in your emergency fund because you don't have these assets invested in vehicles that might earn a higher rate of return — like a mutual fund consisting of stocks and bonds. Higher risk investments like mutual funds, however, run the risk of decreasing in value due to market fluctuations.

(Video) How To Calculate Emergency Fund With Calculator [New 2021]

Some people make a distinction between a rainy day fundand an emergency fund. Generally, a rainy day fund contains a smaller sum of money, designed to help you pay for lesser expenses, like a trip to the veterinarian or a new tire for your car. Your emergency fund is a larger amount of cash set aside to provide income and help financially sustain you over a longer period of time.

Where Should You Keep an Emergency Fund?

The key to where to invest your emergency fund money is liquidity. In case of an emergency, you want to be able to access your money quickly and easily. For this reason, putting your emergency fund money into a five-year certificate of deposit (CD) may not be the best choice because your assets would be locked into a long-term investment. In order to access the money in your CD before it matures, you may have to pay an early-withdrawal penalty. A better choice for an emergency fund may be a savings, interest-bearing checking or money market account. These accounts give you immediate access to your money, if and when you need it for an emergency. However, you also want to earn a little interest along the way — so a money market, which generally offers you a higher rate of interest than a savings or checking account, may be a good choice.Unlike CDs, savings, checking and money money market accounts don't have withdrawal fees associated with them since these account funds are liquid. Investing your emergency fund assets in higher-risk vehicles that may earn you higher rates of return, like stocks or mutual funds, makes your money less liquid and less accessible if you need it quickly.

Using This Emergency Fund Calculator

Based on your assumptions and financial inputs, our Emergency Fund Calculator estimates the amount of money you may need to save on a monthly basis or as a lump sum in order to accumulate your emergency fund goal over the selected period of time. A summary table outlines your emergency fund analysis, recommended savings and ratio analysis (living expenses/earned income and recommended savings/earned income).

(Video) How Much To Put In Emergency Fund?

An emergency fund graph shows the estimated growth of your emergency fund over time, with your monthly contributions and ending balances in different colors.

About Your Inputs

Our Emergency Fund Calculator asks you to complete a series of data fields about your emergency fund assumptions and monthly living expenses.

Assumptions

This section asks you about the financial assumptions you want to make regarding your emergency fund:

  • Current gross monthly income – How much income do you earn each month (before taxes)? Enter the dollar amount here.
  • Current emergency funds available – Have you saved any money up to now for your emergency fund? If so, enter the total here.
  • Number of months for funds to last – How many months of living expenses do you want to save in your emergency fund? Enter the total number of months (between 1 and 360) here.
  • Before-tax return on savings – What rate of return to you expect to earn on your emergency fund? Enter a percentage between -12% and 12%. A negative percentage indicates that you will lose money on your investment, while a positive percentage means you will make money.
  • Marginal tax bracket – Indicate the percentage of federal taxes that you pay (between 0% and 75%). Refer to the 2020 federal taxable income brackets and rates chart (for tax returns due in April 2021) to determine this percentage.
  • Number of months to accumulate funds – How long will you be saving money to put in your emergency fund? Enter the total number of months (between 1 and 360) here.

Expenses

This section asks you about your expenses:

(Video) Emergency Funds: How Much To Save & How To Get Started

  • Total monthly living expenses – How much money do you spend on living expenses each month? Enter the monthly dollar amount here. If you want to itemize your monthly expenses, leave this field at $0 and click the Or Itemize Monthly tab.

Or Itemize Monthly

This section asks you to list all your specific monthly expenses:

  • Mortgage payment or rent – If you own a house or condominium, include your monthly mortgage payment. If you live in an apartment, enter your monthly rent amount.
  • Vacation home mortgage – If you happen to have a second residence in another location, input your monthly mortgage payment for this property.
  • Automobile loan(s) – Have you purchased a new car recently? Enter your monthly loan payment.
  • Personal loan(s) – Have you assumed any personal loan debt to consolidate your credit card payments or make any major home improvements? If so, enter your monthly payment.
  • Charge accounts – How much money do you pay off on your credit cards each month? Input this monthly total.
  • Federal income taxes – Your income (salary, wages, tips, etc.) is taxed by the federal government. Your taxes to the U.S. Treasury are either withheld from your paycheck if you have an employer or are paid quarterly if you are self-employed. Figure out how much you pay monthly in federal income taxes and enter this amount.
  • State income taxes – How much money in taxes do you pay on a monthly basis to the Treasurer of your state of residence? Enter this monthly total.
  • FICA (Social Security taxes) – Your FICA (Federal Insurance Contributions Act) tax helps pay for Social Security and Medicare benefits for retired Americans. If you have an employer, you pay half the FICA tax, and your employer pays the other half. Self-employed individuals are responsible for paying all of the FICA tax themselves, which is included in their quarterly tax estimate payments. Determine your monthly FICA tax and enter the amount in this field.
  • Real estate taxes – Based on periodic property value assessments, annual real estate taxes are paid on any property you own. These taxes support different municipal services and levies, including zoos, parks, public education, libraries and social services for the elderly and disabled. Figure out how much real estate taxes you pay per month.
  • Other taxes – Do you pay any additional taxes like estate taxes or capital gains taxes? Sales taxes would be included in this category as well. Enter your monthly total for any other taxes in this field.
  • Utilities – These include your monthly bills for Internet, cable TV, water, gas and electric.
  • Household repairs and maintenance – What have you spent per month over the last year on repairs (e.g., fixing a leaky roof) and routine maintenance (e.g., interior painting) for your home?
  • Food – Everyone has to eat! What is your monthly grocery bill?
  • Clothing and laundry – How much do you spend each month on brand new clothes and laundry/dry cleaning?
  • Educational expenses – Total up costs for tuition, fees and room and board for members of your family, including yourself. How much do you spend per month?
  • Child care – What is your monthly outlay for daycare and babysitting for your children?
  • Automobile expenses (gas, repairs, etc.) – These expenses will vary depending on how much you travel and the age of your car. What do you spend each month to keep your car gassed up and ready to go?
  • Other transportation expenses – Do you take public transportation on a regular basis? How often do you use ridesharing services? Do you spend money on public parking and toll roads? Add up your monthly miscellaneous transportation expenses
  • Life insurance premiums – What do you spend each month in premiums for all of your life insurance (whole/term/universal) policies?
  • Homeowners (renters) insurance – Homeowners insurance and renters insurance provide financial protection to cover the costs to replace your home and/or its furnishings in case of fire, flooding or theft. How much does your monthly premium cost?
  • Automobile insurance – If you drive, you must pay for car insurance to cover potential medical costs for injured persons and auto repairs needed after an accident or collision. What is your monthly car insurance premium?
  • Medical, dental and disability insurance – How much do you spend per month on health insurance and disability insurance premiums? These insurance policies are necessary to maintain your overall health and teeth and protect you financially in case of an accident that leaves you physically disabled
  • Entertainment and dining – Relaxing and having fun are all part of maintaining a healthy work/life balance. What do you spend each month on going to restaurants and entertainment venues (comedy clubs, theaters, etc.)?
  • Recreation and travel – Your monthly recreation and travel budget will depend on the relative expenses of your favorite activities. Hiking in your neighborhood park is much cheaper than flying to the mountains to go skiing. Total up your monthly expenses for these activities.
  • Club dues – Do you belong to any clubs or pay membership fees on a regular basis? These costs might apply to health clubs, sports facilities, professional organizations or community groups.
  • Hobbies – What do you spend each month enjoying your favorite hobbies? Your personal interests will dictate the size of your budget. For example, if you love music, guitars cost a lot less than pianos!
  • Gifts – No one can escape gift-giving occasions — whether it’s around the holidays or time to celebrate someone’s birthday or wedding. Have you established a monthly budget for gifts?
  • Major home improvements and furnishings – Is it time to gut the kitchen and perform a complete makeover? What about outdoor patio furniture for the fire pit? How much money do you spend each month to beautify your home?
  • Professional services – Do you depend on any professionals for specialized services, like an attorney, financial advisor or exterminator? Think about how many professionals you pay and figure out how much they cost each month.
  • Charitable contributions – How much money do you donate on a monthly basis to your favorite charities and non-profit organizations?
  • Other and miscellaneous expenses – What monthly expenses haven’t you accounted for? Use this field to include any miscellaneous costs that don’t fit anywhere else – like digital streaming services and diapers.

About Your Results

After completing all your inputs, this Emergency Fund Calculator reveals how you can reach your emergency fund goal, either by saving a lump sum amount or through monthly contributions over the duration of time that you indicated. A summary table and graph provide additional information about your emergency fund.

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(Video) How To: Calculate Your Emergency Fund

FAQs

What is the formula for emergency fund? ›

The rule of thumb is that individuals should have enough in an emergency fund to cover three to six months of living expenses. Add up essential living expenses for one month and multiply that amount by either three or six (this will depend on how much you're most comfortable having in case of emergency).

How do you determine how much to save for an emergency fund? ›

While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months' worth of expenses.

Can you save 10k in 6 months? ›

Set Goals and Visualize Yourself Achieving Them

It's one thing to say you'd like to “save more money.” It's another thought process entirely to state a specific number and time frame, such as $10,000 in six months. Break it down, and that means you need to save $1,666.67 per month or roughly $417 per week.

How big Ahould my emergency fund be? ›

How much do I need in my emergency fund? It's recommended to have 3-6 months' worth of expenses saved in your emergency fund, to cover your monthly costs if you're out of work. However, if you're currently paying down debt, your emergency fund should be smaller, in the range of $2,500 to $5,000.

What's the 50 30 20 budget rule? ›

What is the 50/30/20 rule? The 50/30/20 rule is an easy budgeting method that can help you to manage your money effectively, simply and sustainably. The basic rule of thumb is to divide your monthly after-tax income into three spending categories: 50% for needs, 30% for wants and 20% for savings or paying off debt.

Is 100k a good emergency fund? ›

But some people may be taking the idea of an emergency fund to an extreme. In fact, a good 51% of Americans say $100,000 is the savings amount needed to be financially healthy, according to the 2022 Personal Capital Wealth and Wellness Index. But that's a lot of money to keep locked away in savings.

Is my emergency fund too big? ›

The danger of making your emergency fund too big

Your money doesn't grow. Conventional advice says emergency money should be in a regular savings account, where you'll earn under 2% interest. Stashing too much money at low interest rates can mean actually losing money to inflation over time.

Is saving $300 a month good? ›

Yes, saving $300 per month is good. Given an average 7% return per year, saving three hundred dollars per month for 35 years will end up being $500,000. However, with other strategies, you might reach 1 Million USD in 24 years by saving only $300 per month.

Is saving 1000 a month good? ›

If you start saving $1000 a month at age 20 will grow to $1.6 million when you retire in 47 years. For people starting saving at that age, the monthly payments add up to $560,000: the early start combined with the estimated 4% over the years means that their investments skyrocketed nearly $1.

How can I save 1k in 3 months? ›

Make a plan

If you want to save $1,000 in a month, that is $33 a day or about $250 a week. If you want to save your $1,000 in 3 months, you'd need to be saving $11 a day or about $83 a week. If you wanted to reach your savings goal in 6 months, you could pull it off by saving about $5.50 a day or $42 a week.

Is 5k enough for emergency fund? ›

Assess your emergency savings needs

If you're sitting on $5,000 in savings, it means you only have enough money to cover two months of expenses, not three or more. And if that's the case, you should keep adding to your savings account until you reach at least $7,500.

Is 20000 too much for an emergency fund? ›

It's often recommended that you have sufficient emergency savings to completely cover your necessary expenses during a six-month time period. If your typical monthly expenses are around $3,300, $20,000 in emergency savings will cover you for six months. If your monthly expenses are far less, $20,000 might be too much.

How big should your emergency fund be Dave Ramsey? ›

Finance expert Dave Ramsey recommends prioritizing an emergency fund. He suggests starting with a small emergency fund of just $1,000. After becoming debt free, he believes you should have three to six months of living expenses saved.

What is Dave Ramsey 25 rule? ›

For decades, Dave Ramsey has told radio listeners to follow the 25% rule when buying a house—remember, that means never buying a house with a monthly payment that's more than 25% of your monthly take-home pay on a 15-year fixed-rate conventional mortgage.

What are Dave Ramsey's rules? ›

Ramsey says to line up your consumer debts “by balance, smallest to largest,” and attack the smallest debt first by paying off as much of it as possible, while making minimum payments on the rest.

Is the 30% rule outdated? ›

1. The 30% Rule Is Outdated. The 30% rule has roots in 1969 public housing regulations, which capped public housing rent at 25% of a tenant's annual income (it inched up to 30% in the early 1980s).

Is 30k enough for emergency fund? ›

An emergency fund is something that most personal finance experts recommend. In most cases, they recommend having between three and six months of expenses on hand. I've chosen to keep $35,000 on hand for emergencies — a full year of expenses.

Where should I be financially at 40? ›

The traditional rule of thumb from financial advisors is that by the time you reach age 40, you should have three times your salary in retirement savings. So, if you earn $60,000 per year, this means that you should have a total of $180,000 in your 401(k), IRAs, and other retirement-specific accounts.

How much is too much in an emergency fund? ›

Most experts recommend keeping three to six months' worth of expenses in an emergency fund, but some situations warrant more. Some experts recommend a smaller emergency fund while you're paying off debt. If your job is secure and you don't have a lot of expenses, you may be able to save less.

How much should a 30 year old have in savings? ›

Fast answer: A general rule of thumb is to have one times your annual income saved by age 30, three times by 40, and so on.

Is 10k a good emergency fund? ›

It's all about your personal expenses

Those include things like rent or mortgage payments, utilities, healthcare expenses, and food. If your monthly essentials come to $2,500 a month, and you're comfortable with a four-month emergency fund, then you should be set with a $10,000 savings account balance.

How much savings should I have at 50? ›

One suggestion is to have saved five or six times your annual salary by age 50 in order to retire in your mid-60s. For example, if you make $60,000 a year, that would mean having $300,000 to $360,000 in your retirement account. It's important to understand that this is a broad, ballpark, recommended figure.

What's the 50 30 20 budget rule? ›

What is the 50/30/20 rule? The 50/30/20 rule is an easy budgeting method that can help you to manage your money effectively, simply and sustainably. The basic rule of thumb is to divide your monthly after-tax income into three spending categories: 50% for needs, 30% for wants and 20% for savings or paying off debt.

How is fund calculated? ›

To get the total net assets of a fund, subtract any liabilities from the current value of the mutual fund's assets and then divide the figure by the total number of units outstanding. The resulting figure is the NAV of the mutual fund. The NAV of a mutual fund is always calculated at the end of the market day.

What is an emergency fund according to Dave Ramsey? ›

So, what is a fully funded emergency fund? According to Ramsey, it means you have enough money in a savings account to cover three to six months of living expenses.

How big should your emergency fund be Dave Ramsey? ›

If you have consumer debt, I recommend saving a starter emergency fund of $1,000 first. Then, once you're out of debt, it's time to beef up that amount and save three to six months of expenses in a fully funded emergency fund.

What is Dave Ramsey 25 rule? ›

For decades, Dave Ramsey has told radio listeners to follow the 25% rule when buying a house—remember, that means never buying a house with a monthly payment that's more than 25% of your monthly take-home pay on a 15-year fixed-rate conventional mortgage.

What are Dave Ramsey's rules? ›

Ramsey says to line up your consumer debts “by balance, smallest to largest,” and attack the smallest debt first by paying off as much of it as possible, while making minimum payments on the rest.

Is the 30% rule outdated? ›

1. The 30% Rule Is Outdated. The 30% rule has roots in 1969 public housing regulations, which capped public housing rent at 25% of a tenant's annual income (it inched up to 30% in the early 1980s).

What is fund amount? ›

Funds are amounts of money that are available to be spent, especially money that is given to an organization or person for a particular purpose.

Is 5k enough for emergency fund? ›

Assess your emergency savings needs

If you're sitting on $5,000 in savings, it means you only have enough money to cover two months of expenses, not three or more. And if that's the case, you should keep adding to your savings account until you reach at least $7,500.

What is a typical emergency fund? ›

The short answer: If starting small, try to set aside at least $500, but work your way up to half a year's worth of expenses. The long answer: The right amount for you depends on your financial circumstances, but a good rule of thumb is to have enough to cover three to six months' worth of living expenses.

Is 30k enough for emergency fund? ›

An emergency fund is something that most personal finance experts recommend. In most cases, they recommend having between three and six months of expenses on hand. I've chosen to keep $35,000 on hand for emergencies — a full year of expenses.

Is 20000 too much for an emergency fund? ›

It's often recommended that you have sufficient emergency savings to completely cover your necessary expenses during a six-month time period. If your typical monthly expenses are around $3,300, $20,000 in emergency savings will cover you for six months. If your monthly expenses are far less, $20,000 might be too much.

How much emergency fund should I have Suze Orman? ›

If you ask financial guru Suze Orman, you should have enough money in savings to cover eight to 12 months of living expenses.

How much should a 6 month emergency fund be? ›

Generally, your emergency fund should have somewhere between 3 and 6 months of living expenses. That doesn't mean 3 to 6 months of your salary, but how much it would cost you to get by for that length of time.

Videos

1. How Much Should REALLY Be In Our Emergency Fund?
(The Ramsey Show - Highlights)
2. Is $1000 Enough?! How Much You Should REALLY Have In An Emergency Fund
(Dyana Marie )
3. How Much Cash You REALLY NEED in Your Emergency Fund
(LWT )
4. Emergency Fund Saving For Beginners | How Much To Put in Emergency Fund
(Mark Neal)
5. Emergency Fund: How Much Do I Need? | How Much Money Should I Have in My Emergency Fund?
(Frugal Chic Life)
6. Emergency Funds: How Much Should You Have? | Saving Money for Emergency Fund | Ask A Fiduciary
(Strategic Wealth Designers)

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