How Much Emergency Fund Do You Really Need?
3 months? 6 months? 12 months? The right answer depends on your specific situation.
The standard advice is "3-6 months of expenses." But that range is so wide it is barely useful. Here is how to pick YOUR number.
3 Months If...
You are a dual-income household. Your industry has low unemployment. You have no dependents. You have other safety nets (family, disability insurance). Your job skills are highly transferable.
6 Months If...
Single income household. You have dependents. Your industry is cyclical. Your skills are specialized. You own a home (repairs are expensive surprises).
12 Months If...
Self-employed or freelance. You work in a volatile industry. You have health issues. You are the sole provider. You are in a high-cost area with limited job options.
Start With $1,000
Do not let the big number paralyze you. $1,000 covers 80% of emergencies (car repair, medical copay, appliance replacement). Build to $1,000 first, then grow from there.
Track your progress with our emergency fund calculator and build your plan with the net worth calculator.