How big should your emergency fund be?

The usual guideline

A common rule of thumb is three to six months of essential expenses. Essentials are what you'd still have to pay if your income stopped: rent or EMI, groceries, utilities, insurance, transport and minimum loan payments, not your full spending.

When to aim higher or lower

• Aim higher (six months or more) if your income is irregular, you're self-employed, you're the only earner, or you support dependants.
• Three months may be enough if you have a stable job, a second household income and few fixed commitments.

Work out your number

Add up a month of essentials. Say ₹45,000. Three months is ₹1,35,000; six months is ₹2,70,000. Pick a target in that range that fits your situation.

Where to keep it

The fund needs to be safe and quick to reach, not invested for growth. A separate savings account or another low-risk option you can access within a day or two works well. Keeping it apart from your everyday account makes it less tempting to dip into.

Building it

• Start with a first milestone, such as one month of essentials.
• Set up an automatic transfer on payday, even a small one.
• Put windfalls such as bonuses or tax refunds toward it.
• If you use it, refill it before restarting other goals.

Watching your liquid balance in your net worth each month makes progress visible, and that's motivating.

This guide is general information, not financial advice. Your situation may differ, so check the details that apply to you.