Emergency Fund
An emergency fund is measured in months rather than dollars, because the figure that matters is how long it lasts. Promi derives that from your own liquid balances and your own outflows.
The commonly cited benchmark is three to six months of essential expenses held in liquid form. The circumstances that move it are fairly consistent:
What tends to shift the number
- Around three months is associated with two stable incomes and no dependents, where a single job loss does not remove all income.
- Around six months with one income, variable compensation, or dependents.
- Nine to twelve months where income is self-employed or commission based, since the gap between contracts is not a fixed length.
- Longer still where a job change is planned, or the industry rehires slowly.
The months figure uses your spending, not a national average. Two households with identical balances have different runway, because runway is the balance divided by what that household actually spends.
This content is educational and informational only. It is not financial, investment, or tax advice. Consult a qualified professional before making financial decisions.