Lesson 4 of 6 · Your emergency fund · 3 min read · Reviewed 15 Oct 2026
Keep six months of expenses, including EMIs, rent and insurance premiums. Keep 9 to 12 months if your income is irregular or one person earns for the family. Hold it in a savings account, sweep-in FD or liquid fund so you can get it within a day.
An emergency fund pays for a job loss, a hospital bill or an urgent repair without selling investments at a bad time or borrowing.
A common target is six months of expenses. Keep it where you can reach it within a day and where its value doesn’t swing.
Key idea: Count expenses, not income. Include EMIs, rent, school fees and insurance premiums.
Try the calculator and the one-question quiz on this page to check your own numbers.
They can fall 20% to 30% in a bad year, which is often when emergencies happen. Keep the emergency fund separate.
Liquid funds hold very short-term debt and their value moves very little, but they are not guaranteed like a bank deposit.
Put one month of expenses in your savings account first, then add to a liquid fund every month until you reach your target.
For learning only, not investment advice. Designed and built by people who have worked at India’s leading wealth management firms.