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[2023] Emergency Fund Calculator: Prepare for the Unexpected

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Our emergency fund calculator will help you decide exactly how much money you should save so that you can still cover your regular expenses in the event that you encounter a financial or other type of emergency.

Try the emergency fund calculator

Our emergency fund calculator asks you a series of questions in order to determine how much money you should have on hand in the event that something unexpected happens to you.

This amount is calculated by considering:

  • Your monthly income: How much money do you take home each month? If you're paid hourly, rather than a salaried employee, consider taking an average of what you have made each of the past three months.

  • Your monthly expenses: Consider your recurring monthly bills here, but only your necessities. This means things like Exclude streaming services, subscriptions you can live without, takeout, and other expenses that you can cut quickly without penalty. If something serious happens, you may have no choice but to take action quickly.

  • How much cash you already have in savings: While you ideally don't ever want to raid retirement savings, since you'll likely face taxes and penalties, you may have to touch other liquid savings that you had saved for travel, entertainment, or home renovations.

What is an emergency fund?

An emergency fund is a savings account that you can access in the event that you encounter unexpected expenses or face some sort of emergency. Generally, it is good practice to keep these funds separate from your regular brokerage, checking, and/or savings account(s).

In case they need to be accessed in a hurry, emergency funds should be:

  • Highly liquid

  • Easily accessible

  • Linked to a way to pay for things with (debit card, etc.)

What should an emergency fund be used for?

Emergency funds should only be used in the event of emergencies to cover your recurring monthly expenses. Think about those things that you must pay for, or else you'll face financial or other penalties or consequences.

This includes:

  • Your mortgage/rent payment

  • Your car payment

  • Utility bills

  • Food

  • Other necessities

This does not include any non-essential expenses, such as:

  • Eating out/takeout

  • Travel

  • Entertainment

  • Personal care

  • Subscription services

  • Shopping for fun

Why do you need an emergency fund?

Emergency funds are extremely important to save to protect yourself in the event that the unexpected happens. When things go wrong, it tends to happen pretty quickly. And unfortunately, just because you're facing a job loss or expensive health crisis does not mean that your mortgage will not be due or that your family won't need to eat.

Emergency funds are important because life is unpredictable. For instance, on any given day, you could:

  • Have a costly accident

  • Need to replace the brakes on your car

  • Need to hire an attorney suddenly

  • Encounter unexpected or uncovered healthcare expenses

The point is, none of us are immune to life's unexpected events.

How large should your emergency fund be?

Generally, financial experts advocate that you should have at least six months' worth of your monthly expenses saved at any given time. This is the premise that our emergency fund calculator is based on.

For most Americans, six months is enough time to find and start another job or otherwise get over whatever hurdle you've been confronted with.

That said, different types of Americans will want to consider different sized emergency funds. You may want to consider emergency funds of 3, 6, 9, or 12 months. To help you decide the proper number of months you need to save for, ask yourself the following questions:

  • How hard is my income to replace? Higher income earners should consider having larger emergency funds, not only because their monthly expenses tend to be higher, but also because this income is harder to replace in a new job.

  • How tight are my monthly expenses now? Do you currently struggle to make ends meet? Or do you currently find yourself with tons of discretionary income, even after meeting your monthly obligations and putting some money aside in savings.

  • Do you have any passive income streams? Do you have any passive income streams that could hypothetically help you make ends meet, even in the event that you lost your day job or couldn't work for some reason?

I'll use myself as an example here. I make a steady income through my day job, but also supplement by income through The Student Debt Destroyer. But since I am able to meet all of my monthly financial obligations through my day job, I can be a little more relaxed in my calculations and don't need to take into account my business.

Keeping these three variables in mind, as well as your comfort level, should help you to decide on a set number of months of expenses you want to have on hand. Save whatever it takes to make you feel comfortable.

In general, I believe the following savings thresholds are applicable for the following types of situations:

  • 3 months: 3 months may be sufficient for those that know they can find new work quickly and for those that don't have a ton of monthly expenses.

  • 6 months: In my mind, six months is standard for those that own a home, have a job, and need to pay for those typical monthly expenses.

  • 9 months: Those that make more money, know it'll be harder to get a new job, or have higher non-negotiable monthly expenses may opt for a longer 9-month savings fund in the event that they need it.

  • 12 months: If you foresee being unemployed for some time and this scares you, by all accounts go for it and try to save a year's worth of expenses.

How to save an emergency fund

If money is already tight, you're undoubtedly wondering how you'll find enough room in your budget to save your emergency fund to begin with. I have a few suggestions that can help you out.

Use Acorns, Wealthfront, and Guac

Savings apps like Acorns, Wealthfront, or Guac can be great options for you to roundup your purchases and save money without even realizing it. I like Guac in particular because you can pick a certain percentage that you'd like to roundup your purchases by.

For example, if you opt for 10%, the next time you go and spend $100 at the grocery store, you'll also make a $10 contribution into your savings.

Related: Acorns vs. Wealthfront


There is no shortage of other strategies to consider either, headlined by:

  • Giving up eating out/takeout for a period of time

  • Having a staycation rather than a vacation

  • Starting a side hustle to save money

I've written an entire article on the most creative ways to save money!

Where to save your emergency fund

There are a few schools of thought about where to save your emergency fund. Remember - your goal is for this money to be highly liquid and easily accessible.

With this in mind, I have three main ideas:

  • A high-yield savings account

  • A liquid brokerage account

  • A traditional checking/savings account

High-yield savings accounts

High-yield savings accounts are a great option for your rainy-day savings. Not only will you earn much more interest than you will in a traditional checking or savings account with your local bank, but it will also help you to save money for a potential emergency easier.

Plus, given the high interest rate environment the world has entered over the past couple of years, these high yield accounts offer pretty high interest rates.

CIT Bank, an online only bank, currently advertises high-yield savings rates of up to 4.95%. This nearly 5% can make a huge difference add help you to continuously build your savings without even contributing money.

Brokerage accounts

Brokerage accounts can be another great option.

My Fidelity brokerage account, for example, is linked to a debit card that I can use at any time to access and spend funds in the account. Brokerage accounts also have the option to invest any assets you want to, but generally, you will want to be very safe with these funds, since you may need to access them at any time.

Essentially, for emergency fund purposes, I use my brokerage account like a high-yield savings account. My cash is held in a core position that is actually a money market fund that is also tied to prevailing interest rate policy.

As of the time I wrote this article, this fund had a seven-day yield of 4.74%.

Traditional checking/savings account

When in doubt, a traditional savings/checking account may still be your best bet. No, it won't pay interest that can rival either of my first two recommendations, but if you're struggling to understand how high yield and brokerage accounts work, then it may make sense for you to stick to what you know!


Wherever you decide to save it, I recommend that you do so in a separate account from your other money. I've found that this helps me avoid the temptation to use it on things like travel and entertainment.


Given the unpredictability of our everyday lives, it is imperative that you are prepared for a financial emergency. Our calculator can help you to do just that. Do you have a fully funded emergency fund?

Tell me in the comments below!

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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and worked for one of the world's largest asset management firms before starting his own consulting practice.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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