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Finance
Work out how large a cash buffer to keep on hand by multiplying essential monthly expenses by the number of months of cover you want.
The target is a direct multiplication: emergency fund target = essential monthly expenses × months of cover. No growth, return, or time-value assumption is modeled — this is a savings target, not a projection, so the calculator deliberately shows no chart. Assumption to state explicitly: 'essential monthly expenses' should mean the bare-minimum spend needed to keep going during a loss of income (rent or EMI, groceries, utilities, insurance premiums) — not your full discretionary monthly spend — since the fund's purpose is to cover survival costs during an income gap, not to maintain your normal lifestyle.
More months of cover suit less predictable income (freelance, commission-based, or single-earner households) or higher job-loss risk; fewer months can suit dual-income households with stable salaried jobs. 6 months is a commonly used default for a typical salaried household.
Yes — housing costs (rent or EMI) are usually the largest fixed obligation and should be included, along with groceries, utilities, insurance premiums, and any other cost you'd still owe during a temporary loss of income.
This calculator only sizes the target — it doesn't recommend an instrument. In practice, an emergency fund is usually kept somewhere liquid and low-risk (a savings account, a liquid fund, or short-tenure FDs) rather than invested in market-linked assets, since it needs to be accessible quickly without loss of principal when you need it.