Emergency Fund Calculator
A flat "three to six months" rule ignores how your income actually behaves. This calculator sizes your reserve to the longest realistic stretch you'd need to cover, then shows how far you are from it and what to set aside each month. Nothing you type leaves your browser.
How this calculator works
The target is your monthly must-pay costs multiplied by the length of your longest realistic gap, minus whatever income would still arrive during it. If your costs are $8,000 a month, your slowest stretch lasts three months, and you'd still bring in about a quarter of normal revenue, the reserve you need is $8,000 × 3 × 75% = $18,000.
"Months covered now" divides what you've already saved by your monthly costs, so you can see how long you could keep going today if income stopped completely. The monthly figure spreads what's left to save evenly over the time frame you choose.
Choosing your gap length
- Seasonal businesses: use the length of your slowest season, measured from your own records, not your average month.
- Project or client-based work: use the longest a large client has taken to pay, plus the time it takes you to land replacement work.
- Steady recurring revenue: a shorter gap is reasonable, but keep enough to cover the loss of your largest single customer while you replace them.
- Households: use how long it would realistically take to replace your income if your main paycheck stopped. Households with irregular or single incomes usually need a longer gap than dual-income households with steady paychecks.
Where to keep the fund
An emergency fund needs to be reachable within a day or two and not exposed to market swings. A separate high-yield savings account works for most people and businesses. Keeping it separate from your operating account makes it harder to spend by accident. To build it without thinking about it, see how to set up automatic savings transfers.
Common questions
Enough to cover your longest realistic gap, not a fixed number. A business with steady retainer clients might need two or three months of costs, while a seasonal or project-based business may need six or more. Start with your own records: your slowest season, or the longest a big client has taken to pay.
Yes, if you depend on that pay to cover your personal bills. Include the amount you need to draw each month in the must-pay costs, so the reserve protects both the business and your household.
It can be a backup, but not a replacement. Credit lines can be reduced or frozen when a business is struggling, which is often exactly when you need them, and borrowed money has to be repaid with interest. Cash you already hold is the more reliable cushion.
Anything you cannot pause without serious consequences: rent or mortgage, payroll, loan payments, insurance, taxes, utilities and the core tools you need to keep operating. Leave out spending you could cut quickly in a downturn.
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