Which expenses and savings should you include?
An emergency fund sets money aside for unexpected needs. Include monthly essentials such as housing, food and utilities. Add annual essentials separately only if they are not already included in the monthly amount. Count savings available for this fund, excluding money set aside for other goals.
Source: Finanzas para Todos: expenses and emergency funds · Checked on .
How is the fund calculated?
The monthly base is monthly expenses plus annual expenses divided by twelve. The target is this base multiplied by your chosen months, from 1 to 24, rounded up to the nearest cent to cover the target. The remaining amount is the target minus available savings, with a minimum of zero.
Current coverage divides savings by the monthly base. The time estimate divides the remaining amount by your monthly contribution and rounds up to whole months. Interest and inflation are excluded; expenses and contributions stay constant.
Example: covering four months
With €1,200.00 in monthly expenses and €1,200.00 in additional annual expenses, the base is €1,300.00 per month. Four months require €5,200.00. If you already have €1,300.00, you cover one month and need €3,900.00 more. Adding €300.00 a month would take 13 months.
How many months should you choose?
Choose a horizon to compare scenarios based on your expenses and circumstances. The calculation does not decide which fund is sufficient for you or predict emergencies. A monthly equivalent for an annual expense does not show when payment is due.
Frequently asked questions
Practical questions about the inputs and result.
- What if you cannot contribute each month?
- With a zero contribution and money still needed, there is no calculable time to complete the fund. If savings already cover the target, the remaining amount and time are zero.
- What if you enter zero expenses?
- The target is zero. Coverage cannot be expressed in months because there is no expense base to compare savings against.
Your next step
Connect this calculation with your budget and transactions.
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