"Three to six months of expenses" is the classic rule, but the right number depends on how likely and how long a loss of income would be.
Start with expenses, not income
Add up the essentials you would still pay if income stopped: housing, utilities, food, insurance, minimum debt payments, transport. Skip things you would cut straight away. Example: $3,200 a month.
Pick the multiplier
- About 3 months ($9,600): two stable incomes in the household, in-demand skills, few dependants.
- About 6 months ($19,200): single income, or one earner in a cyclical industry, or a mortgage and children.
- 9 to 12 months ($28,800 to $38,400): self-employed, commission-based, seasonal work, or a specialised role that takes long to replace.
Add a separate buffer for known risks: an old car, a home with an ageing roof, or a pet with health issues.
Build it in stages
- First $1,000 to $2,000: stops small surprises from going on a credit card.
- One month of essentials.
- The full target, while still taking any employer retirement match.
Keep it reachable
Hold it in an easy-access savings account at a separate bank from your everyday account, so it is available within a day or two but not visible every time you check your balance.
Free tools
- Emergency fund calculator: https://smartbudgetsheets.surge.sh/calculators/emergency-fund-calculator/?utm_source=mataroa
- High-yield savings calculator: https://smartbudgetsheets.surge.sh/calculators/high-yield-savings-calculator/?utm_source=mataroa
- Savings goal calculator: https://smartbudgetsheets.surge.sh/calculators/savings-goal-calculator/?utm_source=mataroa
- Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=mataroa
- 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=mataroa
General information, not financial advice. Figures are rounded examples.