How big should my emergency fund be?

A common rule is 3 to 6 months of essential living expenses: rent or mortgage, food, utilities, insurance, minimum debt payments and transport. Lean toward 3 months if you have very stable income and few dependents, and toward 6 or more months if your income is variable, you're self-employed, or you're the sole earner. The right number is months of your essential spend, not your total spend.

Where should I keep my emergency fund?

Keep it liquid and safe, like a high-yield savings account or money-market account, not in stocks, which can fall exactly when you need the cash. The trade-off is that idle cash loses buying power to inflation, so the goal is enough to cover real emergencies, not so much that large sums sit losing value for years.

Does inflation affect my emergency fund?

Yes. An emergency fund sized for today's expenses quietly buys less as prices rise. If your essential costs go up with inflation, the fund has to grow by roughly the same rate each year just to keep covering the same number of months. This calculator shows that yearly top-up, so your safety net doesn't silently get thinner.

FIRE & Retirement

Emergency Fund Calculator

Work out how big your emergency fund should be from your real monthly expenses, and how much it needs to grow each year just to keep up with inflation.

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Default inflation rate for Canada: 2.5% per year, based on Statistics Canada (CPI) data (2026). You can override it in each calculator’s advanced options. See data sources for full citations.

Methodology: Mathematical FormulasData Sources: Inflation & Tax CitationsDisclaimer: Legal Disclosures

How We Work It Out

Your target fund is simply your essential monthly spend times the months of runway you want:

Target Fund = Monthly Essential Expenses × Months of Runway

Annual top-up to keep pace = Target Fund × inflation rate

Where the annual top-up is what you must add each year so the fund still covers the same number of months after costs rise with inflation.

Real-World Examples

A 6-month fund on $3,000/month expenses

With $3,000 of essential monthly expenses and a 6-month target, your emergency fund goal is $18,000. At 2.5% inflation, you'd need to add about $450 in the following year just to keep that same 6 months of coverage.

Frequently Asked Questions (FAQ)

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