How it works & FAQs
The math behind the numbers, plus answers to the questions we hear most often.
How many months of expenses for an Indian household?
6 months is the baseline for most salaried households. Reduce to 3–4 months if you have stable government employment and no dependents. Increase to 9–12 months for freelancers, business owners, or households with multiple dependents and high fixed expenses (rent + school fees + EMIs). Our calculator adjusts the target based on your actual profile.
What expenses should I include in my monthly figure?
Include all fixed and semi-fixed expenses: rent or home loan EMI, groceries and utilities, school fees and tuition, insurance premiums (life + health), transport costs, minimum EMIs on any loans, and a baseline medical budget. Do not include discretionary spending like dining out, travel, or entertainment — the emergency fund covers necessities, not lifestyle.
Where should I park my emergency fund?
Keep 1 month of expenses in your savings account for instant access. Park the remaining amount in liquid mutual funds (1-day redemption, 7–7.5% returns) or a sweep-in FD (auto-converts savings into FD above a threshold). Avoid locking the full amount in fixed deposits with penalty on premature withdrawal, or investing in volatile equity.
Should I include health insurance in my emergency fund calculation?
No — health insurance reduces but does not eliminate the cash need. A hospitalisation deductible, non-covered treatment, or a critical illness requiring quick cash all demand liquid savings. Maintain both: an adequate health insurance cover (₹10–25L family floater) and an emergency cash buffer. They serve different purposes.
When can I tap the emergency fund?
Only for genuine emergencies: sudden job loss, unexpected medical bills, urgent home repairs, or a family financial crisis. The emergency fund is not for planned purchases, vacations, investment opportunities, or top-ups to equity SIPs during a market crash. Tapping it for non-emergencies removes the safety net exactly when you need it.