Emergency Fund
Cash reserves covering 3-12 months of essential expenses, held in a liquid account.
Definition
The first line of financial defense against job loss, medical events, and major repairs. Single-income households: 6 months. Dual-income: 3. Self-employed/variable income: 6-12. Held in a high-yield savings account (HYSA) earning 4-5% — not invested in stocks (correlation risk during downturns).
Formula
target = essential_monthly_expenses × target_months
Related wealth terms
One of 40 glossary terms. Browse the full glossary →