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Sep 8, 2021
Personal Finance

Emergency Fund Calculator - A Guide to the Right Amount

An emergency fund is a rainy day safety net that you can fall back on when times get tough or if you find yourself faced with unexpected circumstances and high bills. Many people have discovered just how important an emergency fund is in the recent economic turmoil created by the threat of Covid-19. 

How much is enough to ensure an adequate cushion? This is a common question, so let’s jump in!

How Much Do You Need in Your Emergency Fund?

The “right” amount is different for everyone, but many experts recommend having anywhere between three and six months of expenses stored away. You should consider all the money you spend over the course of a month, and every cent and dollar should be accounted for. 

It’s important not to live too frugally while you track your expenses. If you need to tap into this rainy day fund, you’ll want to keep living comfortably without being lavish, so an honest depiction of your monthly budget is crucial. 

Emergency Fund Calculator

Here is an easy method that will help you narrow down your necessary expenditures and identify the appropriate amount to keep in your savings account. 

An emergency fund is all about covering your costs of living while you aren’t able to work. When you are adding up your expenses, take into account the following:

  1. Your rent or
  2. Utilities (gas, water, Internet, phone bill, etc.)
  3. Groceries and food
  4. Any insurance payments (car, home, renters, etc.) 
  5. Transportation (public transit, car payments, gas, taxi, etc.)
  6. Minimum monthly credit card payments 
  7. Any outstanding loans and debts, excluding your mortgage (student, solar)
  8. Any other required expenses

Once you have calculated a total monthly cost of living, multiply it by at least three to calculate a minimum amount for your emergency fund. That’s it! 

Keep in mind that many experts recommend at least 6 months of expenses tucked away for a better cushion. A higher amount is helpful if unexpected medical expenses or other necessary expenses become a burden.

How Do I Start Saving for My Emergency Fund? 

For many people, especially those with a family and/or living in cities with high costs of living, the number can be staggering, and it’s especially daunting if you don’t yet have any funds set aside. Don’t let the finish line scare you from taking a first step. 

Be realistic with your saving expectations and start small. You can assign milestones each month and gradually build up to your desired amount. Even something as small as a few hundred dollars can take you closer to your goal. For those starting small, you may want to find an account option with no minimum balance.

Consider a recurring deposit to get started. By setting a recurring deposit into a savings account, you can move your minimum contribution to auto-pilot and start to see the balance grow. If you find yourself flush with cash and can afford to contribute a bit more all of a sudden, make additional contributions.

It’s proven helpful for many people to keep their savings in a financial institution that is separate from their normal checking account, or at least in an account that isn’t automatically linked to their checking. Separating your funds will ensure you don’t periodically dip into those emergency reserves for the wrong reason. 

Who Should You Trust with Your Emergency Fund?

There are many options when it comes to saving your money. 

While some people will choose to invest those funds into public equity markets, there is inherent risk in this approach. A downturn in the market or in the specific vehicle (stock, fund, crypto, etc.) you’ve chosen, and you may find that your emergency fund is smaller than when you started.

Choosing a FDIC-insured savings account or equally safe option will ensure that your money is always there when you need it… you know, in case of an emergency. 

Savings rates offered by many banks are quite low, so you’ll want to be sure to shop around for the best alternative for you. 

The national average interest rate for savings accounts was just 0.05% at the time this article was written. While savings accounts generally won’t offer rates that will blow you away, it’s easy to do much better than this with just a bit of research. 

Atmos offers high yielding accounts with saving rates up to 0.51% (up to 10x the national average) and also allows individuals to take steps towards a clean, more environmentally stable future. All of the money kept with Atmos helps to reverse global warming and lighten your personal carbon footprint. There is no minimum balance and no monthly fees, and it’s easy to open multiple savings accounts to meet your personal financial needs.


Emergency funds are necessary to safeguard against all of the curve balls life is bound to throw at you. Having the right amount is important so that financial setbacks and unexpected life circumstances don’t leave you high and dry. Consider risk-free options for at least some of your savings so you know it’s there if and when you need it, but don’t completely sacrifice yield. 

Consider a fresh digital option like Atmos that provides nationally leading rates while putting your money towards reversing global warming and building a more livable planet for ourselves and our children.

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