Emergency fund target calculator

Emergency fund — three months minimum, more if your income is shaky

The "3-6 months of expenses" rule is a starting point. Real targets vary by:

Income stability matters most

• Very stable W-2 with tenure / dual-income household: 3 months. Job loss usually has 30+ day lead time, partner income provides cushion.
• Single-income W-2: 4-5 months. No backup income.
• Variable (commission, bonus-heavy): 6 months. Income can drop 50%+ in a bad quarter.
• Freelance / self-employed: 9-12 months. No paid time off, no employer healthcare bridge.
• Uncertain industry: 12+ months. Tech layoffs in 2023, journalism contraction, etc.

Dependents add to the floor

Each kid adds inflexibility — daycare commitments, after-school care, healthcare. Add 1 month per dependent up to +3.

What "essential" expenses means

Strip your monthly spending to what would survive a job loss:

• ✅ Rent / mortgage, utilities, food, insurance, minimum debt service
• ✅ Childcare (if both parents working)
• ✅ Transportation costs (insurance, fuel for job hunt)
• ❌ Subscriptions, dining out, vacations, gym, hobbies, gifts
• ❌ Extra debt payments (back to minimum during emergency)

The number is usually 60-75% of total monthly spending.

Where to keep it

HYSA, period. Money market funds via brokerage work too. Not in:

• Stocks (drawdown risk exactly when you need cash)
• Long CDs (early withdrawal penalty defeats the purpose)
• Crypto (price volatility makes the floor uncertain)

Current HYSA rates of 4-5% mean a $20k emergency fund earns $800-1,000/year passively — meaningful, not nothing.

What about credit cards as backup?

NO. A credit card is liquidity at 25% APR — survival, not solution. Job loss often comes WITH credit limit reductions or card account closures (banks de-risk on income changes). A real emergency fund is in your name, in a bank, accessible by ACH within 1 business day.