Enter your average monthly costs and your desired months of savings into the calculator to determine your emergency fund?

Emergency Fund Formula

The following formula is used to calculate the total amount needed for an emergency fund.

EF ($) = AC * MS • Where EF is the emergency fund amount ($)
• AC is your average monthly costs($) • MS is your desired months of savings for emergencies ($)

Emergency Fund Definition

An emergency is defined as the total amount of money a person has in savings that is allocated or saved for emergencies only.

How many months of savings should I have for an emergency fund?

In general, most the most suggested amount for an emergency fund is 6 months of costs. This can be difficult for some people, so 3 months is sometimes presented as the absolute minimum.

How to calculate an emergency fund?

First, determine your total monthly costs. This can be done by tracking your expenses for an entire month or taking your expenses for a year and dividing by 12. It’s generally suggested that for determining your expenses, include only expenses that are necessary or nearly necessary for continuing to live.

For this example problem, the average monthly cost of this person $5,000.00. Next, determine the number of months of expenses needed for the emergency fund. In this example, we will use the simple 6 months of expenses. Finally, calculate the emergency fund amount using the formula above: EF ($) = AC * MS

= $5,000 * 6 =$30,000.00.