Emergency Fund Calculator
Enter what your household spends each month, its loan EMIs and its once-a-year bills, and how many months you want covered. You get the emergency fund you need, how far your savings already go, and how much to set aside every month to close the gap.
By Hardik Vegad, founder of WealthGamma · Last updated
Your emergency fund should be
₹3,60,000
That's 6 months of ₹60,000. Save ₹20,577 every month and you'll have it in 12 months.
Your savings last 1.7 of 6 months28%
You spend a month
₹60,000
Already saved
₹1,00,000
Still to save
₹2,60,000
Save every month
₹20,577
What is an emergency fund?
An emergency fund is money you keep aside, safe and easy to withdraw, to pay the bills when income stops or a big expense lands: a job loss, a hospital stay, a car repair. It's what stops you from selling investments in a crash or borrowing on a credit card at 42% a year.
It isn't an investment. Its job is to be there, in full, on the worst day.
How much emergency fund do I need?
Six months of essential spending plus EMIs covers most households. For a family spending ₹40,000 a month on essentials, with ₹15,000 of EMIs and ₹60,000 a year of premiums and fees, that's ₹3,60,000.
That's also the usual advice in India. The National Institute of Securities Markets, set up by SEBI, says most advisers suggest 3 to 6 months of household expenses, and that some raised it to 6 to 12 months after COVID (NISM, Save for Emergencies). Pick your number by how safe your income is:
| Your situation | Months | At ₹60,000 a month |
|---|---|---|
| Two steady salaries, no dependants | 3 | ₹1,80,000 |
| One steady salary, or a family depending on you | 6 | ₹3,60,000 |
| Freelance, business or commission income | 9 | ₹5,40,000 |
| Single income with EMIs, or a job in a shaky sector | 12 | ₹7,20,000 |
Job searches in India often take 3 to 6 months, and a notice period doesn't always come with pay. When in doubt, go a size up.
What is the emergency fund formula?
Monthly need = Monthly expenses + Monthly EMIs + Once-a-year bills ÷ 12
Emergency fund = Monthly need × Months of cover
Still to save = Emergency fund − Already saved
Worked through for the example above, with ₹1,00,000 already saved:
- ₹60,000 of yearly premiums and fees ÷ 12 = ₹5,000 a month
- ₹40,000 + ₹15,000 + ₹5,000 = ₹60,000 a month
- ₹60,000 × 6 = ₹3,60,000
- ₹3,60,000 − ₹1,00,000 = ₹2,60,000 still to save
- Your ₹1,00,000 already covers 1.7 months
How much should I save each month to build it?
Divide what's left by the months you give yourself, then knock off the interest. To build the rest of the ₹3,60,000 in 12 months, save ₹20,577 a month in a fund earning 6%. Without interest you'd need ₹21,667; the interest adds about ₹13,073 along the way.
Stretch it to 24 months and the saving drops to ₹9,723 a month. Most people build the first 3 months fast, then top up the rest more slowly. Pausing a SIP for a few months to fund this is a fair trade.
Should EMIs count in an emergency fund?
Yes. The bank collects your home loan and car loan EMIs whether or not your salary arrives, and a missed EMI stays on your credit report for years. Count every EMI, and any rent you'd still pay.
Leave out SIPs, which you can pause, and spending you'd cut in a bad month: eating out, holidays, new gadgets.
Don't forget bills that come once a year. Health and term insurance premiums, school fees and car insurance don't wait for a new job either; the calculator spreads them across 12 months.
Where should you keep an emergency fund?
Keep it in two places: about one month in a savings account for same-day needs, and the rest in a sweep-in FD or a liquid fund, where it earns more and can still be withdrawn within a day.
- Savings account. Instant, but pays about 2.5% to 3%.
- Sweep-in FD. Linked to your savings account, earns FD interest, and breaks automatically when your balance runs short.
- Liquid fund. Usually in your bank the next working day. Instant redemption gives up to ₹50,000 a day, or 90% of your holding if that's less.
- Overnight fund. Holds only one-day loans, so it's the steadiest kind of debt fund, and it pays a little less than a liquid fund.
- Not equity. Markets can be down 30% in the same month you lose your job; that's often exactly when it happens.
Keep it in a separate account from the one your salary and spending run through, so it doesn't slowly turn into spending money. Interest from savings, FDs and liquid funds is taxed at your slab rate, so the return after tax is lower. That's fine: this money is paid to be safe, not to grow.
How often should you update your emergency fund?
Once a year, and every time your spending jumps: a new loan, a baby, a move to a bigger rent. Prices rise about 6% a year, so a fund that covered 6 months three years ago may cover only 5 today. Run the numbers again with this year's spending.
Once it's full, send the monthly saving to your goals. The goal SIP calculator tells you how much each one needs.
What does an emergency fund not cover?
It covers months of lost income, not every disaster. Three things it doesn't replace:
- Health insurance. A single hospital stay can cost more than 6 months of expenses. Have a family floater first.
- Term insurance. If your family depends on your income, the emergency fund lasts months; term cover lasts years.
- Planned big expenses. A wedding, a car or a home down payment you know is coming belongs in its own savings, not here.
Frequently asked questions
How much should my emergency fund be?
Six months of your essential spending plus EMIs is the usual answer. Use 3 months if two people earn steady salaries, and 9 to 12 if your income is irregular or one salary carries loans.
How is an emergency fund calculated?
Emergency fund = (monthly expenses + monthly EMIs + once-a-year bills ÷ 12) × months of cover. ₹40,000 of monthly expenses, ₹15,000 of EMIs and ₹60,000 of yearly premiums and fees, for 6 months, is ₹3,60,000.
Should an emergency fund be based on salary or expenses?
Expenses. Your salary includes what you save and what you'd cut in a bad month. When income stops, you only need to pay what can't wait: essential expenses, EMIs and once-a-year bills.
Should EMIs be included in an emergency fund?
Yes. Banks still collect EMIs when your salary stops, and a missed EMI hurts your credit score. Count every loan EMI, but leave out SIPs, which you can pause.
Where should I keep my emergency fund?
Keep about one month in a savings account for instant access, and the rest in a sweep-in FD or a liquid fund. Not in equity, which can be down 30% the month you need it.
Is a liquid fund safe for an emergency fund?
Liquid funds hold very short-term debt, so their value rarely falls. Money usually reaches your bank the next working day, and instant redemption gives up to ₹50,000 a day.
Is health insurance a replacement for an emergency fund?
No. You need both. Health insurance pays hospital bills; the emergency fund pays rent, EMIs and groceries when income stops, plus what insurance doesn't cover.