Your emergency fund: the real number
"Three to six months of expenses" is the answer for someone you've never met. Here's how to size it for you.
4 min readPublished May 6, 2026
Count fixed costs, not lifestyle
The right baseline is what it costs to keep the lights on if income stops tomorrow — rent or mortgage, utilities, groceries, insurance, minimum debt payments, basic transport. Strip the rest. Most people's number is thirty to forty percent below what they think.
Adjust for how replaceable your income is
A single-income household with a specialised job needs more than a dual-income household where both salaries cover the basics. If you'd need six months to find similar work, hold six months. If you'd find equivalent work in eight weeks, three months is fine. Be honest, not paranoid.
Hold it where you can reach it in 24 hours
Emergency money goes in cash or a high-yield savings account, never in equities and never locked up in a long-term deposit. The whole point is liquidity. The yield gap costs you a coffee a week and buys you the option to act without selling.
Refill before you reinvest
If you use part of the fund, refilling it becomes the next month's pay-yourself-first target, ahead of any investing. The fund is the floor of the whole financial plan — every other goal sits on top of it and assumes it's intact.