You are building your emergency fund and are writing down your monthly expenses:
Expense Amount
Rent
\[\$1{,}400\]
Utilities
\[\$380\]
Car payment
\[\$525\]
Insurance
\[\$140\]
Groceries
\[\$820\]
Phone & internet
\[\$135\]
TOTAL
\[\$3{,}400\]
Your goal is to have six months’ worth of expenses in the emergency fund.
How much money should you have in your emergency fund to meet your goal?
\[\$\]
To calculate the amount of money you should have in your emergency fund to meet your goal, you need to multiply your total monthly expenses by 6.
Total monthly expenses = $3,400
Emergency fund needed = Total monthly expenses x 6
= $3,400 x 6
= $20,400
Therefore, you should have $20,400 in your emergency fund to meet your goal.