Emergency Fund Calculator

An emergency fund is a pool of money set aside to cover unexpected financial emergencies, such as a sudden job loss, medical bills, or urgent home repairs. It acts as a financial safety net, preventing you from having to go into debt or sell investments to handle a crisis. In Australia, it's a cornerstone of personal financial stability.

The calculator determines the total size of your emergency fund by multiplying your essential monthly expenses by a chosen number of months (typically 3 to 6). Essential expenses include only the necessities: housing (rent/mortgage), utilities, groceries, transport, and insurance. It strips out non-essential spending like entertainment and dining out to calculate the bare minimum you need to survive.

• The '3 to 6 months' rule is a guideline, not a rule. If you're in a volatile industry, are self-employed, or have a single income household, aiming for 6 to 12 months of expenses provides a much stronger safety net.
• Your emergency fund should be kept in a liquid, easily accessible account, like a high-interest online savings account. It should not be in the stock market or a term deposit, as you need to be able to access it quickly without penalty.
• Don't confuse your emergency fund with other savings goals. This money is purely for true emergencies. Having separate accounts for different goals (e.g., house deposit, holiday) is a crucial budgeting discipline.

• Start small and automate it. Set up an automatic transfer of a manageable amount to your emergency fund account each payday. Even $50 a week will build up significantly over time.
• If you receive a financial windfall, like a tax refund or a bonus, allocate at least a portion of it to building your emergency fund until it's fully funded.
• Review your emergency fund once a year. If your essential expenses have increased (e.g., rent has gone up), you'll need to adjust your target fund size accordingly.