• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Credit Card and banking reviews

AllCards.com

Credit Cards, Banking, and Cash Back

  • Best Credit Cards
    • Best Overall Credit Cards
    • Interest Free Credit Cards
    • Balance Transfer Credit Cards
    • Secured Credit Cards
    • Student Credit Cards
    • Metal Credit Cards
  • Cash Back Cards
    • Credit Card Signup Bonuses
    • Best Business Credit Card Signup Bonuses
    • Groceries
    • Streaming Services
  • Cards by FICO Score
    • 500 – 600
    • 600 – 650
    • 650 – 700
    • 700 to 750
  • Compare Cards
    • Ink Business Cash vs. Ink Business Unlimited
    • Chase Sapphire Preferred vs. The Amex Platinum Card
    • Citi® Double Cash vs. Discover It
    • Chase Sapphire Preferred vs. Blue Cash Preferred
    • Citi Double Cash vs. Citi Custom Cash
    • Ink Business Cash vs. Ink Business Premier
    • Capital One Venture vs. Capital One Quicksilver
    • Chase Freedom Unlimited vs. Chase Sapphire Preferred
    • Citi Custom Cash vs. Discover It
    • Citi Custom Cash vs. Blue Cash Everyday
  • Banking
    • Best Interest Rates
    • Savings Accounts
    • Money Market Accounts
    • Free Checking Accounts
    • High Yield Checking Accounts
    • Business Checking Accounts
    • Bank Accounts for Kids & Teens
    • Best Online Banks
    • Best Bank Bonuses
  • Bank CD Rates
    • No-Penalty CD Rates
    • 3-Month CD Rates
    • 6-Month CD Rates
    • 1-Year CD Rates
    • 18-Month CD Rates
    • 2-Year CD Rates
    • 3-Year CD Rates
    • 4-Year CD Rates
    • 5-Year CD Rates
  • Calculators
    • Emergency Fund Calculator
    • CD Interest Calculator
    • Savings Calculator
    • Credit Card Payoff Calculator
    • Debt Payoff Calculator
    • Loan Payment Calculator
You are here: Home / Calculators / Emergency Fund Calculator: Here’s How Much You Should Save for a Rainy Day

Emergency Fund Calculator: Here’s How Much You Should Save for a Rainy Day

May 9, 2022 by Rob Berger

Figuring out how much you should save for emergencies can be overwhelming. After all, the very nature of an emergency is that it's unpredictable. To help you figure out how much to save for a rainy day, we put together this emergency fund calculator.

emergency fund calculator

How much should you save in an emergency fund? The typical answer is three to six months worth of expenses. Like any rule of thumb, however, it's probably wrong for you and me. While rules of thumb offer general guidance, they can't account for our individual circumstances. You may only need three months of expenses, while I may need 12.

To better tailor an emergency fund goal to your needs, I created an emergency fund calculator (see below). To understand the issues involved, let's look at factors that can influence how much one should save for a rainy day.

Table of Contents
  • 2 Types of Emergencies
  • How much should you save in an emergency fund–5 Key Factors
    • 1: How much must you spend each month to survive?
    • 2: How quickly could you find a new job?
    • 3: What other resources could you use in an emergency?
    • 4: Are you a one-income or two-income family?
    • 5: How much do you need to save for peace of mind?
  • Simple Emergency Fund Calculator
  • Next Steps

2 Types of Emergencies

There are two types of financial emergencies–expense emergencies and income emergencies.

An expense emergency is the most common. It's when we face an unexpected cash outlay. There are many reasons this can happen. A blown head gasket on your car; a bald tire that can’t be repaired; the washer and hot water tank go out, or a medical expense that requires immediate payment. Even with insurance this can happen. These types of emergencies can generally be handled with the 1-3 month emergency fund.

It’s the threat of job loss, what I call an income emergency, that can really set you back. Going without income for even a few months could put many on the street. A recent study by the Federal Reserve found that nearly 40% of Americans couldn't handle a $400 expense without borrowing money.

It's here that the importance of your specific circumstances come into play. In fact, there are five key factors to consider in assessing how much money you should save to cover an income emergency.

How much should you save in an emergency fund–5 Key Factors

1: How much must you spend each month to survive?

Many people spend more each month than they must. It's useful to divide spending between true needs and wants. While we may not want to cut our spending to the bone, that's exactly what we should do during an income emergency.

Here are some common expenses that could be slashed during an emergency:

  • Gym memberships
  • Eating out
  • Home services (grass cutting, house cleaning)
  • Subscription services
  • Commuting costs

Once you've figured out your true needs, you know the monthly expenses an emergency fund should cover. One word of caution. Don't cut expenses too much. Some of this comes down to judgment. It may be easy to imagine not going out to eat at all during an income emergency. Then again, ordering a pizza every now and again during difficult times may be the emotional lift you and your family needs.

2: How quickly could you find a new job?

This factor is critical. If you know you can find another job quickly that pays the same, you won't need as large of an emergency fund. An in demand web developer is a good example of such a person.

In contrast, you may work for the only manufacturing company in town. You may have union wages and benefits. Replacing the job could be difficult if not impossible. In such circumstances, a longer emergency fund would be important.

A related consideration is how secure your job is. Of course, even the most secure job could evaporate, as we've seen during the Covid-19 pandemic. It's still worth assessing job security as you plan for your emergency fund.

3: What other resources could you use in an emergency?

Consider whether you have other resources you could use in an emergency. As we were paying off debt, we kept very little in a traditional emergency fund. We did have, however, a growing 401(k) balance. We could have taken a loan from the 401(k) if we had to. It's not ideal; a cash emergency fund is best. Still, it's worth considering what you could do if you lost your job. At a minimum it may help you prioritize your financial goals.

4: Are you a one-income or two-income family?

If you are a one income family, you will likely need a bigger safety net that a two income family. With a two-income family, nless you both work at the same place, it's unlikely that you'll both lose your job at the same time. Of course, Covid-19 may be a once-in-a-lifetime (let's home!) exception to this rule. Exceptions aside, this is another factor to consider.

5: How much do you need to save for peace of mind?

The last factor is peace of mind. While rules of thumb and even an emergency fund calculator can help you arrive at a number, they may not help you sleep at night. If your analysis says four months is enough but your emotions screams seven months, go with your heart.

Simple Emergency Fund Calculator

The emergency fund calculator requires just two pieces of information. First, enter your monthly expenses. Second, select how long you believe it would take you to find a new job that pays the same or more than you are currently making.

Where should you keep your emergency fund?

The best place is an online savings account that is FDIC insured.

Once you have an emergency fund goal, check out 8 Ways to Supercharge Your Emergency Fund Savings.

Next Steps

If you need help budgeting to save for an emergency fund, check out Tiller Money. It's one of our favorite budgeting tools

About Rob Berger

Rob Berger is the founder of allCards.com. He's written about personal finance and investing since 2007 and is the author of the highly acclaimed book, Retire Before Mom and Dad. He is a former litigation attorney in the securities field and the Founding Editor of Forbes Advisor.

Primary Sidebar

Advertiser Disclosure

AllCards has partnered with CardRatings for our coverage of credit card products. AllCards and CardRatings may receive a commission from card issuers.

Featured High Yield Bank Accounts

12-month CD via SaveBetter
APY: 5.01%

27-month CD via SaveBetter
APY: 5.15%
12-month No Penalty CD via SaveBetter
APY: 4.60%

Preferred Savings
APY: 5.02%

 

Credit Cards by Category

  • Balance Transfer
  • 0% APR Cards
  • Cash Back
  • Travel
  • Miles
  • Business
  • Gas Rewards
  • Supermarket Credit Cards
  • Secured Credit Cards
  • Student Credit Cards
  • Prepaid Debit Cards

Credit Cards by Credit Score

  • 700 – 749
  • 650 – 700
  • 600 – 650
  • Under 600

Banking

  • Best Online Banks
  • Best Online Savings Accounts
  • Best CD Rates
  • Best Checking Accounts

Credit Cards by Issuer

  • American Express
  • Capital One
  • Chase
  • Citibank
  • U.S. Bank
  • Wells Fargo

Rate Disclosure

We work hard to make sure the information on this site is accurate. There is no guarantee, however, that it is. So please confirm rates, terms, and all other information directly with the bank, credit union, credit card issuer, or other financial institution before opening an account or otherwise making a financial decision.

About Allcards.com

Rob Berger founded allcards.com in 2008 to help consumers make data-driven decisions about credit cards and banking. A retired trial attorney, he’s written about credit cards, banking and personal finance since 2007, and is the author of Retire Before Mom and Dad.

  • Best Credit Cards of 2022
  • 0% Credit Cards
  • Best Cash Back Credit Cards
  • Best Travel Rewards Credit Cards
  • Credit Cards with Signup Bonuses
  • About
  • Contact
  • Privacy Policy
  • Terms of Use
  • RSS Feed

© 2022 A.R. Roberts LLC All Rights Reserved

Advertising Disclosure: allCards.com is an independent, advertising-supported blog offering financial product comparisons. We are compensated when users click links to or apply for sponsored financial products including, but not limited to, credit cards or bank/brokerage accounts. Credit card reviews and listings express the opinions of the author alone, and not those of any credit card issuer. The content has not been reviewed, approved or otherwise endorsed by the credit card advertisers. This compensation may impact how or where links appear on this site. This site does not include all available financial companies or offers.

Banking Content Disclosure: Content is not provided or commissioned by the bank advertiser(s). Opinions expressed here are author's alone, not those of the bank advertiser(s), and have not been reviewed, approved or otherwise endorsed by the bank advertiser(s). This site may be compensated through the bank advertiser(s) Affiliate Program(s).