What should be the minimum emergency fund based on your salary? See the calculation.

Emergency Funds Calculation: An emergency fund is determined based on your salary and responsibilities. Find out how much money is considered safe for those earning 30,000, 50,000, and 1 lakh rupees per month.

Emergency Funds Calculation: Sometimes, unexpected situations arise in life where you need money immediately. Everyone should not only spend their income but also have a safety plan. Therefore, investing is important. But an emergency fund should also be carefully considered. In case you lose your job, your business is stalled for a few months, or a major expense suddenly arises.

This is when this fund comes in handy. The problem is that most people can't decide how much money they should set aside. Is three months enough, six months, or even a full year's worth of expenses? How much should you have in your emergency fund? Let's explain the full calculation.

For those earning ₹30,000 a month

If your salary is ₹30,000 a month and you're not married, meaning you don't have many responsibilities, it's wise to have an emergency fund that covers at least three months' worth of expenses. Suppose your total expenses are ₹25,000 a month, you should set aside around ₹75,000 for three months. If you live with family or have rent, EMIs, and medical expenses, this amount should be around ₹1.5 lakh for six months.

For those earning ₹50,000 a month

The calculation may be slightly different for those earning ₹50,000 a month. Typically, this salary group includes rent, EMIs, insurance premiums, and family expenses. If your monthly expenses are around ₹40,000, you should have an emergency fund of around ₹2.4 lakh for six months. If you're the sole breadwinner or your job isn't very stable, it's best to have nine months' worth of expenses, or around ₹3.5 to ₹4 lakh.

For those earning ₹1 lakh a month

Those earning ₹1 lakh a month often have significant responsibilities. Home loans, car loans, children's fees, and investments all need to be taken care of. If your monthly expenses are ₹70,000 to ₹80,000, you should have at least a six-month fund, or around ₹4.5 lakh to ₹5 lakh. However, if you are a freelancer, business owner, or the sole breadwinner of your family,

it would be safer to have an emergency fund equivalent to ₹8 lakh to ₹10 lakh, or ₹9 to 12 months' worth of expenses. This amount can be kept in a savings account, short-term fixed deposits, or sweep-in fixed deposits, so that it can be used immediately when needed.