Emergency Fund Size: How to Set Your Target From Your Own Monthly Expenses
Start with one number: your essential monthly spending. Multiply it by three if your income is stable and shared, and by six if you are the only earner, your pay varies, or others depend on your income. That range — three to six months of essentials, not of your full spending — is your emergency fund target. If you are starting from zero, set a $500 starter goal first, then build toward the full target. Start with essentials, not your paycheck An emergency fund covers the bills that keep life running while income is interrupted or a large unplanned bill lands. Count housing, utilities, groceries, insurance, transport, and minimum debt payments. Leave out dining out, streaming, travel, and other spending you could pause in a crunch. The Consumer Financial Protection Bureau makes the same point in its emergency fund guide: the amount you need depends on your situation, so the calculation has to start from your own costs. Here is a worked example. Suppose essential spending adds up li...