Emergency fund calculator
How big should my emergency fund be, and where should it sit?
₹2.5 L short, about 25 months at ₹10,000 a month
- 6 months of essentials is the standard starting point
- +3 for a single earner with dependents
How this is calculated
Rules checked against their sources on 29 September 2026. Tax year FY2026-27.
The first thing to build
An emergency fund is money you can reach within a day or two, set aside for the events that arrive without warning: a job loss, a medical bill above the cover, a parent's fall, a car that dies, a roof that leaks. Its job is to keep every other plan intact. Without it, the first bad month ends a SIP, breaks a deposit at a penalty, or puts the cost on a credit card at 36% a year.
How many months
Six months of essential spending is the standard answer, and the Eazyretire planner's default. Essential means what must be paid whatever happens: rent or EMI, food, utilities, school fees, insurance premiums, minimum loan payments. Not restaurants, not travel.
Adjust for how likely the emergency is and how long it could last. A single earner with dependants needs more, because there is no second income to fall back on. Self-employed and commission income can stop for a season, so it needs more still. Two steady salaries and no dependants can hold less. The calculator applies those adjustments and shows why.
Where to keep it
In tiers. One month in the savings account, reachable instantly. The rest in sweep-in deposits or a liquid or overnight fund, reachable in a day or two and earning 6% to 7%. Not in equity, whose value may be down 30% in the month you need it; not in PPF, which is locked; not in a long deposit whose penalty would make you hesitate. Insurance covers the large medical risk; the fund covers the deductible, the gaps and the rest of life while you recover.
Building it
Until the fund is complete it comes before new investments and before prepaying loans, because the cost of not having it is higher than the return of either. Divide the gap by what you can set aside each month; most households fill it in one to two years. Once it is full, stop: money above the target belongs in long-term investments. Refill it after every use, and recheck the target when expenses change.
How this fits a retirement plan
The planner's readiness score gives points for holding the emergency months in cash and debt, because a plan that has to sell equity in a bad year to pay the rent is not a plan. The fund is the reason the rest can stay invested.
Questions people ask
- Should the fund count the full monthly spending or only essentials?
- Essentials. In an emergency discretionary spending stops, so the fund needs to cover what cannot: housing, food, utilities, fees, premiums and loan minimums. Using the full lifestyle figure overstates the target and delays everything else.
- Can I keep it in equity funds since they are liquid?
- They are liquid but not stable. A market fall of 20% to 30% often coincides with the job losses that create emergencies. Keep the fund in savings accounts, sweep deposits and liquid or overnight funds, and let the long-term money take the market risk.
- Does a credit card or an overdraft count?
- As a bridge for a few days, yes; as the fund, no. Card interest runs at 36% to 42% a year, and a bank can cut a credit line when your income stops. The fund is what pays the card off.
- Is the interest taxed?
- Savings-account interest is taxable above ₹10,000 under 80TTA in the old regime; deposit interest above ₹50,000 a year attracts TDS; liquid-fund gains are taxed at your slab on redemption. The amounts are small; keep the money where it is safe and reachable.
- What if I already have more than the target?
- Move the excess to long-term investments. An emergency fund larger than needed is a drag on returns, and the temptation to dip into it grows with its size.
Want the whole picture?
A free Eazyretire plan puts this number next to your income, savings and spending and tells you whether your money lasts to the age you plan for, and what to change if it will not.