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Emergency Fund Calculator

Sized from the spending you would not stop. Then priced two ways: held in cash, or invested with a buffer for the fall.

Your numbers

$

Housing, utilities, food, transport, insurance, childcare, debt minimums. Not what you would cancel in week one.

Your situation

One earner means a job loss stops the whole income. Two means it halves it.

Pay that already moves month to month draws on the safety net without a job loss.

Seniority, specialism and location all push this out. A senior role in a small field is the slow case.

Employer coverage ends with the job, and replacing it costs more than the payroll deduction did.

112
0%45%

How far down it could be the day you reach for it. Each preset states below whether its figure was observed or derived. The slider is yours.

$
$

Fill both and the panel dates the gap.

Months of cover

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Target to hold

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Cover, in cash
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Buffer on top
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A safety net is not a portfolio. Markets fall when employers cut jobs, so an invested one is down on the day you need it. That is what the buffer pays for.

The same cover, three ways

What each one costs to hold.

Cash, or invested

The same cover, priced two ways.

Hold it in cash

A savings account or a money market fund.

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  • Hold the number. Nothing falls, so nothing is added.
  • Spendable today. No sale, no settlement.
  • Interest tends to trail inflation over years it sits untouched.
  • Interest taxed as ordinary income, every year.

Invest it

A conservative mix, held for the growth.

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  • The buffer turns the cash figure into this one.
  • Expected to grow faster than cash over time. That is the argument for it.
  • Settles next business day, then a day or two to your bank.
  • Selling in a fall locks the loss. Selling at a gain owes tax.

Where a safety net gets kept

Not a ranking, and no rates: a rate goes stale within months, and how each option fails does not.

Where How fast you can spend it Can it lose value Tax Cap The catch
High yield savings account Same day to next business day None, within deposit insurance limits Interest is ordinary income, federal and state None, but insurance is per depositor per bank The rate is not promised. It is cut the moment short rates fall, usually without notice.
Money market fund Sell any business day, cash settles the next Designed to hold its value, not guaranteed to Ordinary income. A government fund's income is often partly exempt from state tax None It is a fund, not a deposit. There is no FDIC insurance behind it.
Treasury bills, laddered At maturity, or sell on the secondary market the same day None if held to maturity. Selling early can be at a loss Federal yes. State and local no None in practice A rung you have not reached yet is not spendable without selling it early.
Series I savings bonds Locked for the first 12 months, then a few business days Cannot lose principal Federal yes. State and local no $10,000 per Social Security number per calendar year, electronic Nothing at all for a year, and cashing before five years costs the last three months of interest. Source
Certificates of deposit, laddered At maturity. Earlier costs a penalty None, within deposit insurance limits Interest is ordinary income, federal and state None, but insurance is per depositor per bank Breaking one early hands back months of the interest that was the reason to use it.
Taxable brokerage account Sell same day, settles the next, then a day or two to your bank Yes. It can be worth less than you put in Capital gains on the way out. Losses may be deductible None It tends to be down for the same reason you lost the income. That is the whole problem this page is about.
Roth IRA contributions A few business days, and it depends what the money is invested in Whatever the investments carry Contributions come out first, with no tax and no penalty. Earnings do not The annual contribution limit What you take out cannot be put back. You are spending contribution room you never get again. Source
Home equity line of credit Same day, if the line is open when you reach for it It is a debt, not savings. The balance is owed back with interest Interest is not deductible unless the money went into the home Whatever equity the bank will lend against The bank can cut or freeze the line. Lenders froze lines widely in 2008. Source

This tool provides estimates for general planning purposes only, not personalized financial or tax advice. It relies on simplifying assumptions (see "How this is calculated" below) that will not match your actual results. Consult a qualified professional before making financial decisions.

How this is calculated

The formula

cover in cash  = monthly essential expenses × months of cover
buffer         = 1 ÷ (1 − drawdown) − 1
target to hold = cover in cash ÷ (1 − drawdown)

Read the last line backwards: hold that, lose the drawdown, and the cover is still there. Betterment publishes a flat 30% buffer for an invested safety net and states no allocation and no fall behind it. Run the formula against that buffer and the fall it implies is 23%, which is where the bond heavy preset comes from: a derived figure, not an observed one. At a 34% fall, where a 60/40 portfolio landed in 2008 and 2009, the same formula asks for 52%. A flat 30% does not cover a 60/40.

Where the months come from

months = 3 + household + steadiness + time to replace + coverage
         (held between 3 and 10)

Three is the floor. Each answer states the months it moves, and the line under the questions sums them. Employer coverage adds one because losing the job also ends the coverage.

The weights are ours, not a published standard. No research maps a household to a month count, and any calculator implying otherwise made its weights up too. Ours are on screen.

What counts as essential

Anything you would still pay in a month with no income. Housing, utilities, food, transport, insurance, childcare, medicine, debt minimums. Not restaurants, travel, subscriptions or the gym. A safety net priced off total spending is priced off a lifestyle you would drop in week one.

What this does not model

  • Benefits, severance, notice. All three shorten what the safety net carries. All three vary by state and employer. The figure here is before any of them.
  • A market that keeps falling. The buffer covers one drawdown on the day you reach for the money, not six months of spending into a slide.
  • Tax on the way out. The target is what you hold, not what lands in your account.
  • Anything but income loss. A roof or a hospital bill does not wait for a job loss, and does not scale with months of cover.

Shared assumptions

  • No taxes, fees, or lumpy spending. Investment fees, taxes on withdrawals, one-off costs, and changes in your spending over time are not modelled.
  • Nothing leaves your browser. The whole calculation runs client-side. We do not receive, log, or store anything you type into the calculator.