Example: Emergency fund monthly method calculation
Here’s how much you might put away using the monthly method after breaking down your monthly expenses:
Category | Expenses |
---|---|
Rent | $1,000 |
Groceries | $450 |
Dining out | $350 |
Car loan | $200 |
Utilities | $150 |
Miscellaneous expenses | $150 |
Car insurance | $100 |
Cell phone bill | $75 |
Car fuel | $50 |
Subscriptions | $15 |
Total expenses | $2,540 |
If your goal is to have three months’ worth of expenses stored away, you’d need $7,620 ($2,540 x 3) in your emergency fund. For a more conservative savings plan of six months, you’d need $15,240 ($2,540 x 6).