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How much cash cushion do you actually need? Enter your monthly expenses and find out.
Include all essential monthly costs: rent/EMI, food, utilities, transport, insurance, school fees.
Emergency money is usually judged on three things: how quickly you can reach it, how steady its value is, and what it costs you to get out early. Returns matter far less here than they do for long-term investing. Below is what each common option trades off — this is a description, not a ranking or a recommendation.
The most immediate option — money is available straight away, including outside banking hours. The interest rate is typically the lowest of the options here, which is the trade-off for that immediacy.
A debt mutual fund category investing in very short-maturity instruments. Redemptions typically credit the next working day, and some schemes offer an instant-redemption facility subject to limits set under SEBI rules. The value can still move, so it does not behave like a deposit.
The return is contracted upfront, so the value does not fluctuate. Withdrawing before maturity usually costs a penalty on the interest rate. Each bank sets its own penalty, so check yours before counting an FD as emergency money.
Taxed as an equity fund where it holds at least 65% in equity and equity-related instruments. The applicable rates and holding periods are set by the Finance Act and have changed more than once — check the current position with the CBDT or a tax adviser rather than assuming.
Useful only for a small buffer — a power cut, or a card network being down. It earns nothing, inflation reduces what it buys over time, and it carries theft and loss risk the other options do not.
Emergency fund is the foundation. Now map your bigger financial goals.
In short
This sizes the cash buffer to hold before you invest: your essential monthly expenses multiplied by the number of months you want covered. It shows a 3-month minimum, your chosen target (6 months by default), a 9-month upper end, and the gap between that target and what you have already saved.
The steadier your income, the lower you can sit. A salaried double-income household with good health cover may be fine at 3–4 months; a single earner, freelancer or business owner with dependants should lean toward 6–9.
Somewhere you can reach within a day or two without taking a loss — a savings account, a sweep-in FD, or a liquid fund. The goal is availability, not returns.
Generally yes, at least the 3-month minimum. Without it, the first emergency becomes a credit-card balance or forces you to redeem long-term investments at the worst possible time.
The regulator's financial-literacy material on saving and household resilience. The specific 3-to-9 month band is a personal-finance convention rather than a regulatory standard — stated plainly here so you can judge it for yourself.
This tool gives you a number. These free WealQuest lessons explain the idea it rests on — in English and हिंदी, no sign-up.
This explains the maths behind the tool so you can trust the number. It is educational information, not financial advice.