Emergency Fund
Cash held specifically so that an unplanned expense does not become debt.
The purpose is narrow: absorb a shock without converting it into a balance that compounds. Job loss, medical bills and major repairs share the property of arriving without notice and rarely alone.
The commonly cited benchmark is three to six months of expenses, not income, which matters because the two can differ by a wide margin. At $4,000 a month of spending, the range works out to $12,000 through $24,000 regardless of salary.
Where it sits involves a real tradeoff between yield and access. Savings accounts at the same institution vary by several percentage points on identical balances, and the difference on $20,000 is a few hundred dollars a year, which is worth knowing before treating all cash accounts as interchangeable.
Worked through
The same repair, two ways
A $3,800 transmission failure, met from reserves in one case and from a card at 24% in the other.
- Repair
- $3,800
- Card interest, year one
- $912
- Reserves available
- $18,000
- Cost if paid from cash
- $3,800
Same repair. Paid from cash it costs $3,800, carried on the card it costs $912 a year until cleared.
Where this lives in Promi
Accounts page. Liquid against non-liquid, with emergency fund coverage.
Related in Cash Flow & Runway
See your own emergency fund
Promi computes this from your linked accounts, with the definition one click from the number.
Try the demo