Calculators
Work out how much you need set aside for the months you cannot earn, and how long it will take to save it.
Estimates for planning only.
Your emergency fund target
$24,000
You have 1.3 months of essential expenses set aside and reach 6 months in 38 months.
21% of the way there
Still to save
$19,000
Months of cover you have now
1.3
On track by
October 2029
An emergency fund is the difference between an unwelcome event and an expensive one. Without a buffer, a broken transmission or three weeks of unpaid sick leave gets paid for with a credit card, a personal loan or buy-now-pay-later - and the interest on that borrowing outlives the emergency by years. The fund is not an investment. Its job is to be boring, liquid and available on the worst day of your year.
One Australian reality makes the case concrete. Losing your job does not mean government support arrives the following week: Services Australia applies a liquid assets waiting period, so a JobSeeker claim can be held for somewhere between one and thirteen weeks if your available savings exceed the reserve amount, which changes and depends on your circumstances.
Read that and the shape of the problem is clear. Support is delayed precisely because you have savings, and re-employment takes time - often considerably longer than a few weeks. That is the gap your fund exists to cover.
Where does building it sit against everything else competing for your money? The usual order of operations is: a small starter buffer first, so a minor shock does not immediately become debt; then any debt above roughly 10% interest, because no savings account beats the guaranteed return of not paying credit card interest; then the full fund; then investing. The starter buffer comes first for a behavioural reason rather than a mathematical one - paying down a card while having nothing in reserve usually ends with the card being used again.
The rule is months of essential expenses, never months of income. This is the single most common error. Income includes tax, superannuation and every discretionary dollar you would stop spending the moment things went wrong; sizing a fund off income sets a target you will never reach and do not need. Expenses are what it actually costs to keep your life running.
Moneysmart, the Australian Government's financial guidance service, puts the baseline at three months of expenses. Six is the more common target and the figure this calculator opens on, because three months of cover leaves nothing in reserve for the event that caused the income to stop, and because the variance in how long re-employment actually takes is wide enough that three months sits at the thin end of what most people need. Treat three months as a first destination rather than a finish line.
Push towards nine or twelve months if your income is variable or your re-employment is slow: self-employed, contract or casual work, a single-income household, dependants who rely on you, a mortgage that dominates your budget, or a narrow specialisation where the right role takes longer to find. Three to six is reasonable if you have two secure incomes in different industries, low fixed costs and no dependants.
What counts as an essential expense is the number that drives everything on this page, so it is worth getting right. Include rent or mortgage repayments, rates and strata, utilities, groceries, transport and fuel, insurance premiums, minimum repayments on existing debts, childcare, school fees, and medicines or ongoing health costs. Exclude what you would pause without much pain: subscriptions, dining out, holidays, gym memberships, discretionary shopping, and extra repayments above the minimum. Most people find their essential figure is materially lower than their normal monthly spending, which makes the target less daunting than they expected.
Pay yourself first. An automatic transfer on payday, or a payroll split that sends part of your wage straight into a separate account, removes the monthly decision entirely - and the monthly decision is where saving plans die. Money you never see in your everyday account is money you do not have to resist spending.
Start smaller than feels serious. Moneysmart makes the point plainly: $20 a week is more than $1,000 within a year. Waiting until you can save a meaningful amount is how people arrive three years later with nothing saved, while an unimpressive automatic transfer quietly builds a real buffer in the background.
Direct windfalls at the target rather than at your lifestyle. Tax refunds, bonuses and back pay are the fastest way to close a shortfall precisely because they were never part of your monthly rhythm and will not be missed.
Then protect the fund from things that were never emergencies. Car registration, insurance renewals, annual subscriptions and Christmas are all entirely predictable, and raiding the emergency fund for them is the most common reason a balance never grows. The fix is a sinking fund: a second savings account with its own automatic transfer, sized to the annual total of those known costs divided by twelve. The emergency fund then only ever gets touched by genuine surprises.
Two properties matter far more than return: you can reach the money within a day or two, and it is separated from the account you spend from. A fund earning a slightly better rate that takes a week to access, or that sits alongside your groceries money, has failed at its actual job.
A high-interest savings account is the straightforward home. It is liquid, it is separate, and it earns something. Two caveats: many bonus rates require monthly conditions such as a deposit and no withdrawals, which an emergency fund by definition may fail in the month you most need it - so check what the base rate falls back to. And interest earned is assessable income, taxed at your marginal rate, so the advertised rate is not the rate you keep.
If you have a mortgage, an offset account changes the arithmetic. Money in an offset reduces the balance interest is charged on, and the interest you avoid is not taxed, unlike interest you earn. That can make the effective return higher than a savings account paying the same rate - though the benefit is capped at the loan balance, and is worth less or nothing to someone whose income falls below the tax-free threshold. Offset accounts often sit inside a packaged loan with an annual fee, so the net advantage depends on the package cost and the loan balance. The distinction worth understanding is offset versus redraw: an offset account is your money in a separate account, while redraw is a facility to pull back extra repayments, and lenders retain the ability to restrict, reduce or freeze redraw. For a fund whose entire purpose is availability under stress, that difference matters. It is also worth considering that keeping the emergency fund at the same institution as the mortgage means both are affected if that institution has operational difficulties at the wrong moment.
Term deposits pay a fixed rate but lock the money away, which defeats the purpose unless you ladder several with staggered maturities so a portion is always coming available. Volatility and settlement time are why this money is typically held in cash rather than in shares, ETFs or crypto: an equity portfolio can be down 30% at exactly the moment you are made redundant, and selling to cover expenses still settles in days. This is the one pot of money where volatility is not a risk you are being paid to take.
A useful test is three questions, all of which need a yes. Is it unexpected? Is it necessary? Is it urgent? A burst hot water system, an emergency dental appointment, a flight home for a family crisis, the excess on a car accident, or the rent during unpaid leave all pass. A holiday, an upgraded phone, a genuinely good sale, and your annual car registration all fail - the first three are not necessary, and the last is not unexpected.
This is not a rule about deserving. Guilt about using an emergency fund for an actual emergency is misplaced; the fund did its job and the money was always for this. The failure mode worth guarding against is not spending too readily, it is spending on the predictable and then having nothing left for the genuine surprise.
What matters more is what happens afterwards. Once you have drawn on the fund, rebuilding it is typically treated as the first goal again rather than a background one. That usually means redirecting discretionary investment contributions and extra debt repayments back toward the fund, restarting or increasing the automatic transfer, and treating the shortfall the same way as the original target. Recalculate here with what is actually left in the account, and give yourself a date.
Sizing the fund off income instead of essential expenses. It produces a target that is often twice what you need, which is discouraging enough that many people never start.
Holding far more than you need in cash. A buffer beyond twelve months of expenses, for most households with stable work, is money being eroded by inflation and tax while it could be paying down a mortgage or invested. The fund has a right size; past that point, cash is a cost.
Keeping it in the everyday transaction account. Money that is visible is money that gets spent, usually without any decision being made. A separate account at a different institution adds just enough friction.
Treating an unused credit card limit as an emergency fund. A credit limit is not savings, it is debt that has not happened yet - and it can be reduced or withdrawn by the issuer at exactly the point your circumstances change, which is when you would need it.
Not adjusting the target as life changes. A mortgage, a child, a partner leaving full-time work, or a move to contract work all change the essential expenses figure and the months of cover you should hold. It is worth recalculating annually.
The standard guidance is three to six months of essential living expenses, not income. Moneysmart puts the baseline at three months, while six months is the more common target because three months of cover leaves nothing in reserve for the costs that typically accompany an income loss, and re-employment timelines vary widely enough that three months sits at the thin end of what most people need. Work out what it costs each month to cover housing, utilities, food, transport, insurance, minimum debt repayments and health, then multiply by the number of months you want covered. For a household with $4,000 a month in essential expenses, that is $12,000 at three months and $24,000 at six.
It depends on how quickly you could replace your income. Three months is reasonable for a household with two secure incomes in different industries, low fixed costs and no dependants. It is thin for anyone self-employed, on contract or casual work, in a single-income household, supporting dependants, or working in a narrow specialisation where the right role takes months to find - six to twelve months suits those situations better.
Somewhere liquid and separate from your everyday spending. A high-interest savings account is the straightforward choice, though bonus rates often carry monthly conditions that a withdrawal will break, so check the base rate. If you have a mortgage, an offset account is worth understanding: the interest it saves you is not taxed, while interest earned in a savings account is assessable income, so the effective return can be higher - though offset accounts often come with an annual package fee, and the benefit is capped at the loan balance and worth less for lower income earners. Volatility and settlement time are why this money is typically held in cash rather than in shares, ETFs or crypto: they can be well down at the exact moment you need to sell.
Usually a small starter buffer first, then high-interest debt, then the full fund. Paying down a credit card is a guaranteed return equal to its interest rate, which no savings account matches, so high-interest debt - commonly anything above roughly 10% - is typically cleared before building a full six-month fund. But clearing a card with nothing in reserve tends to end with the card being used again at the first surprise. A buffer of around one month of expenses, or $1,000, is usually enough to break that cycle before focusing on the debt.
It can delay them. Services Australia applies a liquid assets waiting period to new claims for payments including JobSeeker, so if your available savings exceed the reserve amount your first payment can be held for between one and thirteen weeks. The waiting period can be waived in cases of severe financial hardship. This is an argument for holding a larger buffer rather than a smaller one, since support may not arrive for months. Confirm your own position with Services Australia, as the reserve amount and rules change.
A useful test is three questions that all need a yes: is it unexpected, is it necessary, and is it urgent? A failed hot water system, an emergency dental visit, an insurance excess after an accident, or rent during unpaid leave all qualify. A holiday, a phone upgrade or a sale does not, because none are necessary. Neither does car registration or an annual insurance renewal - those are predictable, and they belong in a separate sinking fund so your emergency fund is not drained by costs you could see coming.