Calculate your recommended emergency fund size and create a savings plan to reach your goal. An emergency fund protects you from unexpected expenses and financial hardships.
Why You Need an Emergency Fund
An emergency fund is your financial safety net for unexpected situations:
- Job Loss: Covers living expenses while you search for new employment
- Medical Emergencies: Handles unexpected healthcare costs and deductibles
- Home & Car Repairs: Pays for urgent repairs without going into debt
- Family Emergencies: Covers travel and expenses for family crises
Emergency Fund Guidelines
Basic Rule: Save 3-6 months of essential expenses (not total income).
Higher Risk Jobs: Self-employed or commission-based workers should save 6-12 months.
Stable Employment: Government workers or tenured positions may need only 3-4 months.
Where to Keep Your Emergency Fund
Your emergency fund should be:
- Easily accessible within 24-48 hours
- In a separate savings account from daily spending money
- FDIC insured for safety
- Earning some interest but liquidity is more important than returns
- Not invested in stocks or bonds that can lose value