The Emergency Fund Target

How many months of expenses to hold, and where to keep the fund so it is actually reachable when needed.

The standard emergency-fund target is enough to cover at least six months of expenses. The months-of-expenses table scales the target from one month to six, so a starter fund is not treated as a failure.

A one-month buffer is a reasonable starting point. Three months is a common intermediate target, and six months is the standard figure cited in personal-finance checklists.

The fund is usually funded from the savings share of the budget. A common guideline dedicates 10 to 20 percent of post-tax income to savings and investments, and the emergency fund typically comes first out of that share.

Where to keep it: somewhere it can be reached without selling investments at a loss or paying early-withdrawal penalties. The exact account type is a personal choice; the requirement is accessibility.

The fund is not a investment portfolio and not a spending account. It exists to cover expenses when income stops, which is why the target is stated in months of expenses rather than in a fixed sum.

• One month of expenses — a starter buffer.
• Three months — a common intermediate target.
• Six months — the standard target.
• Keep it accessible; do not lock it behind penalties.

Further reading

• Your First Budget in One Evening
• Tracking Without an App Addiction