PortioOpen appGuides · By the Portio team ·
Emergency fund calculator: how big should it be?
An emergency fund should cover three to six months of your basic costs: rent, bills, food and transport, not your whole salary. Start with one month, because the first month is the one that keeps a bad week from becoming a debt. Type your basic costs and what you can set aside to see your target and how long it takes.
- One month of costs1,500
- Three months of costs4,500
- Six months of costs9,000
Setting aside 450 a month, you have one month of costs in 4 months, three in 10 months and six in 20 months.
Read the full guide
What is an emergency fund for?
For costs that are urgent, necessary and unplanned: losing your job, a medical bill, a repair that cannot wait, a trip for a family emergency.
It is not for holidays, sales, or costs you know are coming once a year. Those get their own line in your budget, as explained in why your salary runs out.
Without a fund, every surprise becomes a debt, and the debt makes the next month harder.
How do I count my basic costs?
Count only what you could not stop paying:
- rent
- power, water, internet and phone
- food and transport
- insurance and medicine you need
- minimum payments on your debts
Leave out trips, eating out, and saving itself. In a hard month those stop first.
For someone with 1,050 of bills and 450 of food and transport, the basic costs are 1,500 a month. If that person earns 3,000, six months of costs is 9,000, not 18,000. The target is smaller than most people fear.
Three months or six?
| Your situation | A reasonable target |
|---|---|
| Stable job, two incomes at home | 3 months |
| One income supports the household | 6 months |
| Irregular income: freelance, commission, seasonal work | 6 months or more |
| A job that would be hard to replace | 6 months or more |
The less predictable your income and the more people depend on it, the larger the fund.
How long does it take to build?
With basic costs of 1,500 and 450 set aside each month:
| Target | Amount | Reached in |
|---|---|---|
| One month | 1,500 | 4 months |
| Three months | 4,500 | 10 months |
| Six months | 9,000 | 20 months |
Twenty months looks long. It is normal, and the fund is built only once. To get there faster:
- Send irregular money to the fund first: a bonus, a refund, a gift.
- Borrow from your own wants for a while. Move a few points from trips to the fund until the first month is in place.
How much to set aside each month is covered in how much of your salary to save.
Where should I keep it?
In a place that is:
- Separate from your daily account, so it is not spent by accident.
- Safe. Its value should not go up and down.
- Reachable within a day or two.
An emergency fund is insurance, not an investment. Its job is to be there, not to grow.
What do I do after I use it?
Refill it before you go back to your other goals. Using the fund is not a failure. It is the reason you built it.