Emergency fund: The 3-6-9 rule explained
- Save three months of expenses if you are single and earn a steady income,
- Save six months of expenses if you have dependents and earn a steady income,
- Save nine months of expenses if you are single and your income is irregular,
- And save 12 months of expenses if you have dependents and your income is irregular.
How to calculate emergency fund using 3-6-9 rule?
- Start by first list all your non-negotiable monthly expenses — This will include the food and groceries expenses, water and electricity bills, home loan, internet bill, EMI(s), insurance premiums, loan repayments, school fees, transportation expenses, and the likes.
- Next, multiply the total above in increments of three, six and nine (and 12 for those who need it) to calculate the target you need to achieve a good cushion of savings over the medium term.
- It is also important to periodically assess the math against your most recent expenses every few months to ensure that your emergency fund matches latest requirements.
Can start small, but build steady
How experts suggest you invest for emergency fund
Disclaimer: This story is for educational purposes only. We advise investors to check with certified experts before making any investment decisions.