Finance · Free tool
Emergency Fund Calculator
A buffer of 3–12 months of essential expenses, parked in a liquid fund or savings + sweep FD. Don't skip this — it's the foundation of any financial plan.
Rent + groceries + EMIs + utilities + school fees. Skip discretionary.
Single income → 6+; freelancer / business → 9-12; dual income, stable jobs → 3-6.
Park in a liquid mutual fund (best returns) or sweep-FD (instant access). Avoid equity.
How much is enough
The standard rule is 3–12 months of essential expenses (not income). Essentials = rent or home-loan EMI, groceries, utilities, school fees, insurance premiums, minimum debt EMIs, fuel and medical buffer. Discretionary spends (eating out, travel, OTT) are excluded because you would cut them first in a crisis. Single-income families and freelancers should target the upper end; dual-income salaried couples can sit at 4–6 months.
Worked example
A Bengaluru couple: rent ₹35,000, groceries ₹15,000, EMIs ₹25,000, school fees ₹12,000/month, utilities and fuel ₹8,000, insurance ₹5,000 (averaged). Essentials ≈ ₹1,00,000/month. A 6-month buffer = ₹6 lakh. Park ₹2 lakh in a savings + sweep FD (instant access) and ₹4 lakh in a liquid mutual fund (T+1 redemption, ~6–7% yield, beats SB interest). Avoid equity funds, ULIPs or PPF for this bucket — volatility or lock-in defeats the purpose.
When to use this
- Before quitting a salaried job to freelance or start up
- Single-earner families with school-going children in private school
- Anyone with a home loan EMI > 30% of take-home (job-loss risk hits harder)
- Senior citizens whose income depends on FD rates
Park decisions: see liquid fund vs sweep FD and our guide on PPF vs FD vs RD: where to park money.
FAQ
Where should I park my emergency fund?
Liquid mutual funds (best returns, ~7-8% currently, T+1 redemption) or sweep-FD (instant access, slightly lower yield). Avoid equity, gold, real estate — all wrong asset class for emergencies.
Should the emergency fund include EMIs?
Yes. Compute monthly essentials AS IF you lost your income — that includes EMIs, rent, groceries, utilities, school fees, insurance premiums. Skip discretionary (eating out, vacations).
How is this different from insurance?
Insurance covers specific catastrophes (medical, life). Emergency fund covers everything else — job loss, cash gaps, deductibles, roof leaks. Both are needed.