Calculator
Plan Your Emergency Fund
Calculate how much you need to set aside for unexpected expenses, job loss, medical emergencies, or other financial emergencies.
Financial Security
Build a safety net to cover unexpected expenses without derailing your financial goals.
Peace of Mind
Know you're prepared for emergencies like job loss, medical expenses, or urgent repairs.
Smart Planning
Determine the right amount to keep liquid while investing the rest for growth.
Inputs
Calculate your emergency fund needs
Determine how much you need to set aside for unexpected expenses and emergencies.
Monthly Expenses
Your total monthly living expenses including rent, groceries, utilities, EMIs, etc.
Months of Coverage
How many months of expenses you want your emergency fund to cover (typically 3-6 months).
Existing Emergency Fund
Amount you already have set aside for emergencies (savings account, liquid funds, etc.).
Recommended Coverage
6 months is the standard recommendation for most people - provides good balance of security and liquidity.
Results
Emergency Fund Analysis
Your personalized emergency fund planning insights.
Required Emergency Fund
₹3,00,000
6 months of expenses
Existing Emergency Fund
₹0
Shortfall
₹3,00,000
Amount needed to reach target
Monthly Savings Needed
₹24,199
To build fund in 12 months
Risk Level
HIGH
You have a significant shortfall. Building an emergency fund should be a priority.
Build Your Emergency Fund
To build your emergency fund of ₹3,00,000, you need to save ₹24,199 per month for the next 12 months. Consider investing in liquid mutual funds or high-yield savings accounts that offer better returns than regular savings accounts while maintaining liquidity.
Next step
Need help building your emergency fund or choosing the right liquid investment options? Our experts can help you create a plan to build your emergency fund while optimizing returns.
Get Your Personalized Emergency Fund Report – Free
Download a detailed emergency fund planning report with actionable recommendations.
What is an Emergency Fund?
An emergency fund is a financial safety net designed to cover unexpected expenses or financial emergencies. It's money set aside in a liquid, easily accessible account that can be used to cover expenses like medical emergencies, job loss, urgent home repairs, or other unforeseen circumstances without having to dip into your long-term investments or take on high-interest debt.
The general rule of thumb is to have 3-6 months of living expenses saved in your emergency fund. However, the exact amount depends on your individual circumstances, such as job stability, income sources, financial obligations, and risk tolerance. Self-employed individuals or those with irregular income may need 9-12 months of expenses.
Why is an Emergency Fund Important?
Financial Security
Protects you from unexpected expenses without derailing your long-term financial goals or forcing you to liquidate investments at unfavorable times.
Avoid Debt
Prevents you from taking high-interest loans or credit card debt during emergencies, which can compound your financial problems.
Peace of Mind
Reduces financial stress and anxiety, knowing you have a safety net to fall back on during difficult times.
Investment Protection
Allows you to keep your long-term investments intact, letting them grow without interruption even during emergencies.
Job Loss Protection
Provides a buffer to cover living expenses if you lose your job or face a reduction in income, giving you time to find new opportunities.
Medical Emergencies
Covers unexpected medical expenses, deductibles, or treatments not covered by insurance, ensuring you can focus on recovery.
Where to Keep Your Emergency Fund?
Liquid Mutual Funds
Liquid funds offer better returns than savings accounts (typically 5-7% p.a.) while maintaining high liquidity. You can withdraw funds within 1-2 business days.
High-Yield Savings Account
Some banks offer savings accounts with higher interest rates (4-6% p.a.) while maintaining instant access to your funds.
Short-Term Fixed Deposits
FDs offer slightly higher returns but with a lock-in period. Consider keeping a portion in FDs with auto-renewal for better returns.
Money Market Accounts
These accounts offer competitive interest rates with check-writing privileges, providing both returns and accessibility.
Frequently Asked Questions
The standard recommendation is 3-6 months of living expenses. However, this depends on your circumstances: salaried employees with stable jobs may need 3-6 months, while self-employed individuals or those with irregular income should aim for 9-12 months. Consider factors like job security, health insurance coverage, and financial obligations when determining your target.
Your emergency fund should be kept in liquid, low-risk instruments that can be accessed quickly. While you want some returns, the primary goal is accessibility and safety. Liquid mutual funds, high-yield savings accounts, or short-term FDs are good options. Avoid equity investments or long-term instruments for your emergency fund.
Include all essential monthly expenses: rent/mortgage, utilities, groceries, insurance premiums, loan EMIs, transportation, and minimum debt payments. You don't need to include discretionary expenses like entertainment, dining out, or non-essential shopping, as you can cut these during emergencies.
While credit cards can provide temporary relief, they should not replace an emergency fund. Credit cards come with high interest rates (typically 24-36% p.a.), and relying on them can lead to debt accumulation. An emergency fund helps you avoid high-interest debt and provides true financial security.
The time to build an emergency fund depends on your savings rate and target amount. If you save 10-20% of your monthly expenses, you can build a 6-month emergency fund in 2-3 years. Start by setting aside a fixed amount each month, and consider using windfalls (bonuses, tax refunds) to accelerate the process.
If you use your emergency fund, prioritize rebuilding it as soon as possible. Resume your monthly contributions and consider temporarily reducing other investments or expenses until your emergency fund is restored. The fund should be replenished before resuming normal investment activities.
While you can mentally allocate portions of your emergency fund for different purposes (medical, job loss, home repairs), it's more practical to maintain a single emergency fund that covers all types of emergencies. This provides more flexibility and is easier to manage.
Summary
An emergency fund is a cornerstone of sound financial planning. It provides financial security, peace of mind, and protection for your long-term investments. By calculating your emergency fund needs and building it systematically, you create a safety net that allows you to handle unexpected expenses without derailing your financial goals.
Remember, your emergency fund should be easily accessible, kept in low-risk instruments, and separate from your long-term investments. Start building your emergency fund today, even if you can only save a small amount each month. Over time, consistent savings will help you build a robust financial safety net.
