How to use it
- Use the formula below with your own figures.
The formula
Target = monthly essentials × months of cover.
Worked example
$3,000/month of essentials with 6 months' cover is $18,000.
Frequently asked questions
How many months?
Three to six is common; more if income is variable.
Where to keep it?
Somewhere safe and easy to access.
Tips
- Automate deposits so saving happens by default.
- Keep an easy-access emergency buffer separate from goals.
- Chase a competitive rate — the gap compounds.
Key terms
- APY
- Yearly rate including compounding.
- Liquidity
- How easily you can access funds.
- CD
- A fixed-term deposit.