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MasterMath

Emergency Fund Calculator

With 1,500 a month in expenses, six months of cover means a fund of 9,000. If you have 3,000 and save 250 a month, you are two years away.

Currency and number format for

Target fund

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Target fund—
Still needed—
Months already covered—
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How this was worked out

    The formula

    target = monthly expenses × months you want covered

    Where it comes from

    An emergency fund is measured in months of expenses, not in a round figure, because what it has to cover is time without income. Three months is the usual floor and six is the common target; anyone self-employed or on unstable income needs more.

    How to work it out by hand

    1. Add up what you actually spend in a month, not what you earn
    2. Multiply by the number of months you want covered
    3. Subtract what you already have set aside
    4. Divide the gap by what you can save each month

    What is worth knowing

    The number to use is expenses, not income: what the fund has to replace is your outgoings while there is nothing coming in. Two things people get wrong. They size it on their salary, which makes the target far larger than it needs to be, and they keep it somewhere it cannot be reached in a day. An emergency fund is not an investment: its job is to be there instantly and intact, so it belongs in an instant-access account, not in the market. Losing 20% of it in a crash at the exact moment you lose your job defeats the point.

    Frequently asked questions

    How many months should it cover?

    Three as a floor if your income is stable and someone else could cover you, six as the standard target, and nine to twelve if you are self-employed or the only earner.

    Expenses or income?

    Expenses. The fund replaces what you spend, and using income makes the target much bigger than necessary.

    Where should I keep it?

    Somewhere you can reach it the same day without losing value: an instant-access savings account. Not in shares, not locked in a fixed-term deposit.

    Should I build it before paying off debt?

    Build a small buffer first, then attack high-interest debt, then finish the fund. Without any buffer the next unexpected bill goes straight back onto the card.