Emergency Fund: How Much & Where to Keep It

How much

A common guideline is 3 to 6 months of essential expenses: the things you'd still have to pay even without income (housing, utilities, food, insurance, minimum debt payments). Aim for the higher end if your income is variable or you're the sole earner in your household; the lower end can be reasonable with a stable job and a second income to fall back on.

Where to keep it

A high-yield savings account (HYSA), usually at an online bank, is the standard place: fully liquid, FDIC-insured, and earning meaningfully more interest than it would sitting in checking. This money should not be invested in the stock market — you need it to be there, in full, whenever the emergency happens. See Buckets for more on this.

Build this before investing beyond an employer 401(k) match. Without it, an unexpected expense often turns into credit card debt, or forces selling investments at exactly the wrong time.

For a fuller picture that pulls your essential expenses directly from a real budget, see the Budgeting (50/30/20) calculator, which includes this same emergency-fund target automatically.

Quick emergency fund calculator

Enter your essential monthly expenses and how much you can save each month.

Essential monthly expenses ($)Housing, utilities, food, insurance, minimum debt payments — not discretionary spending.Months of coverageMonthly amount you can save ($)

Target

$13,200

Time to reach it

5 yr 6 mo

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