Every personal finance article seems to say the same thing: “Build an emergency fund.” But once you’ve decided to start one, the next big question is how much is enough? Some advice says $1,000, others say three to six months of expenses, still others a year or more. The truth is more nuanced: the right number depends on your life, your risks, and your comfort level.

Let’s break down what really matters when determining the size of your emergency fund — with examples along the way.

Why “One-Size-Fits-All” Advice Doesn’t Work

The classic rule of thumb is three to six months’ worth of living expenses. That’s a solid starting point, but it doesn’t fit everyone.

• A single renter with no dependents and a steady government job may not need as much cushion.
• A family of four with a mortgage, car payments, and one self-employed parent may need more than six months.

Your emergency fund should reflect your unique situation, not just a blanket rule. I can’t guarantee an answer on how much you should set aside, but let’s go through some factors to think about to help you decide how much is enough for you.

Step 1: Identify Your Essential Expenses

An emergency fund exists to keep you afloat — not maintain your lifestyle. Focus on what you must pay to survive, not what you’d like to spend. This is to ensure you have enough to cover the necessities if you happen to get fired, laid off, injured, or a myriad of other issues that may arise.

Essential expenses usually include:

• Housing (rent/mortgage, property taxes, HOA dues)
• Utilities (electricity, water, gas, internet)
• Food and groceries (exclude dining out, but include grocery essentials like cleaning supplies and animal food)
• Transportation (car payment, gas, insurance, public transit)
• Health insurance premiums and medical costs
• Minimum debt payments (student loans, credit cards, etc)

Tip: Look at your last three months of spending and mark what’s essential. Add it up to find your “monthly survival number.”

Step 2: Multiply by Your Risk Profile

Here’s where nuance comes in. Your personal and career stability should determine the multiplier.

• 1–3 Months: Appropriate if you have a very stable income (long-term government or union job), no dependents, and low fixed expenses. This is a riskier approach for most people, but may be sufficient if your income is very secure and you’re comfortable with a small cushion.
• 3–6 Months: A safe middle ground for most people — especially dual-income households or single professionals with steady jobs. 
• 6–12 Months: Best if you’re self-employed, work on commission, have dependents, or face higher risks (like uncertain health or job security).

Examples in Practice

• Young Professional (Low Risk): Sarah is 25, rents an apartment, has no kids, and works in IT with a strong job market. Her essential expenses are $3,000/month. A 3-month fund ($9,000) is plenty.
• Family with Mortgage (Medium Risk): Mark and Jen have two kids, a mortgage, and one steady job plus one freelance income. Their essential expenses are $5,500/month. A 6-month fund ($33,000) gives peace of mind.
• Small Business Owner (High Risk): Alex owns a small café. Essential expenses for personal and business obligations are $8,000/month. Given the uncertainty of business income, Alex should aim for at least 9–12 months ($72,000–$96,000).

Step 3: Balance Peace of Mind with Practicality

For emergency funds that have large balances (such as Alex’s from the example above), I like to think of them as a goal to build toward. If you’re starting with nothing, building an emergency fund of $72,000 may take several years unless business is booming–and that’s okay. The emergency fund doesn’t need to be fully funded right away–think of it as a long-term target. Having something set aside is better than nothing and you’ll have plenty of time to build it to the security that you need. The main purpose of an emergency fund is to make you feel safe, not stuck. Saving $72,000 might sound great — but if it takes you 10 years to get there and you put every last dollar into it, you’ll be exposed in the meantime. Start with a smaller milestone, like $1,000 or one month’s expenses, or even as simple as $50 a paycheck, and then build toward your long-term target. 

Step 4: Remember Life Changes

Your emergency fund isn’t set in stone. Review it once a year or after a major change (marriage, kids, new house, job change). What was “enough” two years ago may fall short today. Other factors to consider are things that you know are aged and may quit soon, but are still operating fine such as replacing a car, updating your HVAC, or even future family care expenses. While none of these expenses are desired, you can get a sense of when the expenses might occur. As a result, you may need to increase your emergency fund by the expected cost of the replacement, repair, or cost, or know that your emergency fund balance will drop soon and be ready to refund it in the upcoming years. As you think about life changes, approximate costs as accurately as you can and try to predict expected unexpected expenses that will occur–you just don’t know when.

Where to Keep Your Emergency Fund

Finally, finding a place to keep your emergency fund can be tricky because you don’t want it to lose a lot of value (thinking of Alex from above who has $70,000-$100,000 to fund), but you also want it accessible. Below are some common places emergency funds are kept, however there can be some nuance to where emergency funds are kept which we will cover in the next post.

• High-Yield Savings Account (HYSA): Safe, accessible, and earning a little interest.
• Money Market Account: Similar to HYSA, sometimes with check-writing privileges.
• Separate Bank Account: Helps resist the temptation to spend.

There’s no single answer to “how much is enough.” The right emergency fund is personal — big enough to cover your essential needs, realistic enough to build, and flexible enough to grow with you.

Start where you are, build consistently, and remember: your future self will thank you for having a cushion when life throws the inevitable curveball. In our next post, we will go into more detail about some places to keep your emergency fund.

– Brendan Tiedeman, CPA