Emergency Fund Calculator

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Emergency Fund Calculator

In this post, we will walk you through some things to consider when evaluating how much you should keep as an emergency fund. once you there is a calculator at the bottom

An emergency fund is like a financial life jacket.  It won’t necessarily keep you moving, but it will keep you afloat when you find yourself in the stormy sea of unexpected life events. It’s a separate stash of cash designed to cover urgent, unforeseen expenses, such as medical emergencies or urgent car repairs.

So, the question is, how much cash should you stash away? As you can guess, the details really matter here. It’s not a one-size-fits-all kind of question. If it’s just you, no partner, no kids, no one else depending on you, you can probably get by with less on hand. It’s like being a speedboat on the open water – you can change course quickly and adapt on the fly. But let’s flip the script. Say you’re responsible for a big family – think five kids, a couple of cats, and a dog. Well, in that case, you’re more like an ocean liner, and you better have a much bigger cushion because if something happens, you’re not just steering your own course, but theirs too. Those trusting faces that look up at you and ask, “Why are we packing up all our things?” – they’re your responsibility. And you’ve got to keep them in mind before you make any big life decisions.

How Large Should Your Emergency Fund be?

So back to the question: how much cash should you keep on hand? To work this out, it’s a bit like solving a puzzle. You’ve got to ask yourself some important questions.

Do you own a house? Does that house have a mortgage? If you lost your job tomorrow, would you have to sell your house? If so, you need to add about 3.5 months to your buffer. That’s typically how long it takes to sell a house. So, when you hit 3.5 months of cash reserves, that’s when you need to start talking to a realtor about putting your house on the market. And don’t forget, moving isn’t free – add a month’s worth of expenses to cover that. Plus, you’re likely to pay around 6% in selling costs on your house, whatever its value is.

But here’s where it gets a bit more complicated. Are you in negative equity – is your house worth less than you owe on it? I sincerely hope not. But if you are, we need to account for that, because in that situation, selling your house could actually land you in more financial hot water.

So, as you can see, figuring out how much cash to keep on hand really is a multi-layered question, and it requires a thorough understanding of your own personal circumstances, so we highly recommend that you seek financial advice regarding your personal circumstances before making major financial decisions.

The Variables

I personally use this formula to attempt to objectively calculate the months I need to keep on hand.

D = Dependents (The number of people who don’t Eat if you do not get paid)

J = Job Stability (0 = Unstable, 1 = Not Sure, 2 = Very Stable)

H = Home Owner Status (0 = Rent, 1 = Own)

L = Monthly Loan Payments in $

I = Take Home Pay Each Month in $

F = Debt Payment Factor = (1 / (1 – (L / I)))

N = Number of Income Sources

  • 1 Job → 1
  • Dual Income → 2
  • More Than 2 Income Streams → 3

Job Specialty (S): Do you work in a specialized field? The more specialized your job, the more months you might need, as finding new employment could take longer.

M = Months Needed

M = (3 – J) +(s/2) + (0.5 · D) + (3.5 · H) + ((3 – N) · F)

Emergency Calculator

Months Needed (M):


Your emergency fund is a complex thing and should be one of the first items in your financial shield. While this calculator may be helpful please seek financial advice as you are evaluating your own circumstances.

Budgeting doesn’t have to be difficult or painful! By following the steps outlined in this blog post, you can easily create a budget that works for you and helps you achieve your financial goals. So what are you waiting for? Get started on building your budget today!