Emergency Fund Calculator

How the emergency fund target and timeline work

In its emergency fund guide, the Consumer Financial Protection Bureau (CFPB) defines an emergency fund as a "cash reserve that’s specifically set aside for unplanned expenses or financial emergencies." This tool starts with your core monthly bills ($3,000.00 by default) and subtracts any steady monthly offset ($0.00 by default). That gives your net monthly burn of $3,000.00. Multiplying by 6 months of cover sets an $18,000.00 target.

Next, it divides your $5,000.00 starting balance by $3,000.00 a month to show 1.67 months of runway (51 days). Each month, the ledger adds whole-cent interest on your prior balance and then adds your $500.00 deposit. At 3% a year, month 1 adds $12.50 of interest and your $500.00 deposit to end at $5,512.50. Repeating that monthly step reaches your target in month 25.

Target reserve, runway, and monthly compounding formulas

B = max(0, E − O);   T = B × M;   S = max(0, T − C_0)
r_k = round(C_(k−1) × R / 1,200);   C_k = C_(k−1) + r_k + p
n = min { k ≥ 0 : C_k ≥ T };   I = C_n − C_0 − n × p

Worked example: $18,000.00 six-month reserve from $5,000.00

Start with essential monthly bills of E = $3,000.00 and an offset of O = $0.00. Set your target to M = 6 months of cover, starting from C_0 = $5,000.00 at R = 3% a year with a monthly deposit of p = $500.00.

1. Net burn, target reserve, runway, and shortfall. Net monthly burn is B = $3,000.00 − $0.00 = $3,000.00. Over 6 months, your target reserve is T = $3,000.00 × 6 = $18,000.00. Your $5,000.00 balance covers $5,000.00 ÷ $3,000.00 ≈ 1.67 months (or round(5,000 × 365 / 36,000) = 51 days). That leaves a shortfall of S = $18,000.00 − $5,000.00 = $13,000.00 (27.78% funded).

2. Month-by-month compounding vs. 0%. At 0% interest, closing a $13,000.00 gap at $500.00 a month takes ceil($13,000.00 ÷ $500.00) = 26 months. At 3% compounded monthly (r = 0.03 / 12 = 0.0025 per month, or 3.04% APY), month 2 adds $13.78 of interest and $500.00. That ends month 2 at $6,026.28 and passes the 2-month $6,000.00 mark. The balance passes the 3-month benchmark ($9,000.00) in month 8 at $9,136.06 ($136.06 of interest).

3. Hitting $18,000.00 in month 25. Month 24 ends at $17,660.20 ($339.80 short of $18,000.00). In month 25, interest is round($17,660.20 × 0.0025) = $44.15. The $500.00 deposit lifts the balance to $18,204.35 ($5,000.00 starting + $12,500.00 deposited + $704.35 interest). That finishes 1 month sooner than the 26-month no-interest timeline. Once funded, the target balance at 3% earns $45.00 in month 1.

Assumptions, liquidity boundaries, and account limits

• Whole-cent monthly ledger: This page's own model credits interest each month on the prior balance, rounded half-up to the cent (`round(balance × rate / 1,200)`), then adds the monthly deposit at the end of the month. Daily compounding or a start-of-month deposit shifts the total by a few dollars. Regulation DD Appendix A says the interest earned figure used for the annual percentage yield earned "must be rounded to two decimals and reflect the amount actually paid." That rule covers statements, not how your bank compounds.
• Fixed bills, offset, and rate: Monthly bills, the monthly offset, the deposit, and the annual rate stay constant across the schedule. High-yield savings and money market rates are variable and can change at any time.
• Pre-tax interest and static prices: Bank interest is taxed as income in the year paid (IRS Form 1099-INT). All figures are in pre-tax dollars. Update your monthly bill number once a year as rent, food, and insurance prices change.
• Deposit insurance cap: The tool flags any target above $250,000.00, the single-owner FDIC and NCUA coverage cap. Joint accounts cover $500,000.00 for two co-owners. Trust accounts cover up to $1,250,000.00 per owner with five or more beneficiaries in the FDIC insurance calculator.

These figures are estimates for learning and planning, not financial, tax, legal or investment advice. Terms of use.

Next steps for building and holding your reserve

Build your reserve in two stages if 6 months feels far off. From $5,000.00 saved on a $3,000.00 monthly burn, aim first for the 3-month benchmark of $9,000.00. At $500.00 a month and 3%, you reach $9,000.00 in 8 months and the 6-month $18,000.00 goal in month 25.

Keep planned yearly bills out of your emergency fund. Known costs like car insurance, holiday travel, or property tax are not emergencies. Save for them in the sinking fund calculator or set a target date in the savings goal calculator.

Check how your monthly deposit fits your paycheck. On $5,000.00 of monthly take-home pay, a $500.00 deposit is 10% of net pay, half of the 20% savings bucket in the 50/30/20 budget planner. Track your total savings share across cash and retirement in the savings rate calculator.

Move idle cash out of near-zero checking, then invest once your reserve is full. On the $18,000.00 target, a 3% savings account earns $547.49 in 12 months versus $12.60 in an average interest checking account. After month 25, send your $500.00 monthly deposit into the compound interest calculator.

Emergency fund questions