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Emergency Fund

An emergency fund acts as 'insurance for your insurance' — covering 3 to 12 months of expenses so unexpected costs (job loss, medical, family emergencies) don't force you to sell investments at the wrong time.

Inputs

Fixed costs: rent or mortgage, food, transport, insurance, utilities, etc.

Funds immediately accessible: savings, short-term deposits, money-market funds.

Results
Recommended fund (6 months of expenses)
NT$240K
NT$40K × 6 months
Current status
Short by NT$140K
NT$100K covers 2.5 months of expenses
Calculation logic
  • Base months by income stability: stable 3, normal 6, unstable 12.
  • Add 2 months if financially responsible for others.
  • Add 1 month if no health insurance coverage.

An emergency fund keeps unexpected events (job loss, medical bills, appliance failure) from forcing you to sell long-term investments at a bad time. Keep it in savings or short-term deposits — do not chase yield.

Rule of thumb

  • Stable employment (civil servant, large company): 3–6 months
  • Typical salaried worker: 6 months
  • Self-employed / freelance: 12 months
  • Dependents (spouse, kids, parents): +2 months
  • No health insurance: +1 month

Keep it in highly liquid accounts (checking, short-term fixed deposit, money market fund). Don't chase returns on emergency money.

Frequently asked

Why shouldn't emergency funds be invested for returns?
Because their job is to protect you when you should not be selling assets. Market crashes correlate with rising unemployment — both happen together. If your emergency fund sits in equities, a job loss during a downturn forces you to liquidate at the bottom. The opportunity cost (1-3% annual yield missed) is the price of insurance.
How do I choose between 3 and 12 months?
Three questions: (1) How long would it take to land a comparable role? Salaried 1-3 months, senior 3-6 months, niche industries can be longer. (2) How many people depend on your income? More dependents → larger fund. (3) Do you have health and disability insurance? Strong coverage → smaller fund. The tool computes a recommended figure from these answers.
Where should the emergency fund sit?
Three options: (1) high-yield checking / digital bank savings (~1.0-1.5% in 2026) — most convenient; (2) short or breakable fixed deposit — slightly better yield; (3) money market fund — moderate liquidity, near-deposit returns. A mix is fine: 1 month in checking, the rest in deposits or MMF.
Can I use credit card limits as my emergency fund?
Strongly discouraged. Credit card revolving rates run 12-15% and minimum payments compound the debt. Bridging 1-2 months on credit is feasible; surviving 6 months of unemployment on credit traps you in heavy debt. The fund must be actual liquid cash.
I already have an emergency fund — when do I add to it?
It's a relative target — it scales with monthly expenses. After marriage, a home purchase, or having a kid, monthly spending rises, so the fund must rise proportionally. Audit yearly: target months × current monthly expense vs current fund balance.
Does this tool store my income data?
No. All math runs locally in your browser. Nothing is sent or persisted.

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