# Emergency Fund Plan: [Household name]

> A plain-language plan for the money a household keeps aside for
> unexpected events such as job loss, urgent repairs or medical bills:
> how big the fund should be, where it is held, how fast it is built,
> what counts as an emergency, and how it is refilled after use. The
> structure follows widely used consumer guidance, including the US
> Consumer Financial Protection Bureau guide to building an emergency
> fund (page last modified 2025-10-29), written for any country.
> Replace every `[bracketed]` value and every row marked *Example*.
> This is a document format, not financial, tax, legal or banking
> advice. Deposit protection and account rules differ by country: check
> local rules.

<!--
Guidance: How to use this template
- Start with section 2 (essential monthly expenses). Every other number
  is a multiple of it.
- Choose the number of months in section 3 from your own risks, then
  pick where to keep the money (section 5) before you start saving, so
  the first deposit has a home.
- Build in stages: a small starter fund first, then the full target.
  A starter fund prevents new debt while you pay off old debt.
- The worked example follows the fictional household "Sam and Jordan
  Ellison". The same household appears in the Debt Payoff Plan
  (`personal/debt-payoff-plan`) and the Retirement Plan
  (`personal/retirement-plan`), and the three plans use the same
  numbers. Delete the example rows once yours are filled in.
- Related: Budget (`personal/budget`), Financial Plan
  (`personal/financial-plan`), Insurance Review
  (`personal/insurance-review`), Emergency Document File
  (`personal/emergency-document-file`).
-->

## Document control

<!-- Guidance: Keep this short. The key fields are the target, the current balance and the next review date. -->

| Field | Value |
|---|---|
| Document ID | [EFP-001] |
| Household | [Names] |
| Version | [1.0] |
| Status | [Draft / Building / Fully funded / Rebuilding] |
| Owner | [@household-member] |
| Approvers/reviewers | [Partner] |
| Last updated | YYYY-MM-DD |
| Classification | Private (contains personal financial data) |
| Currency | [Currency] |
| Target amount | [Amount] |
| Balance at last update | [Amount] |
| Next review | YYYY-MM-DD |

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Plan owner | [Name] | [Agreed] | YYYY-MM-DD |
| Partner or co-owner | [Name] | [Agreed] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change |
|---|---|---|---|
| 1.0 | YYYY-MM-DD | [@owner] | First plan |
| 1.1 *(Example)* | 2027-04-01 | [@owner] | Card B cleared; monthly transfer raised from 300 to 1,000 |

## Contents

- [1. Purpose](#1-purpose)
- [2. Essential monthly expenses](#2-essential-monthly-expenses)
- [3. Risk factors and number of months](#3-risk-factors-and-number-of-months)
- [4. Target amount](#4-target-amount)
- [5. Where the fund is held](#5-where-the-fund-is-held)
- [6. Build schedule](#6-build-schedule)
- [7. What counts as an emergency](#7-what-counts-as-an-emergency)
- [8. Using the fund](#8-using-the-fund)
- [9. Refill plan](#9-refill-plan)
- [10. Review triggers](#10-review-triggers)
- [11. Local equivalents](#11-local-equivalents)
- [12. Glossary and references](#12-glossary-and-references)
- [Standard and licence note](#standard-and-licence-note)

## 1. Purpose

<!-- Guidance: Write one or two sentences on why this fund exists for your household. A clear purpose makes it easier to leave the money alone. Pitfall: mixing the emergency fund with savings for planned costs such as holidays or a new car; those are "sinking funds" in your budget. -->

An emergency fund is cash set aside only for unplanned, necessary costs or for a sudden loss of income. Its job is to stop a bad month from turning into new high-interest debt, missed rent or a forced sale of investments at a bad time.

This plan sets out:

- what the household must spend each month even in a hard time;
- how many months of those costs the fund should cover, and why;
- where the money is kept so that it is safe and quick to reach;
- how and how fast the fund will be built;
- the rules for using it and for refilling it.

*Example purpose:* "Our fund covers six months of essential costs, because we have one child, a mortgage and Jordan's shift allowances vary. It means a boiler repair or a few months without one salary never goes on a credit card again."

Planned, predictable costs (annual insurance premiums, car servicing, holidays, birthdays) are not emergencies. Save for them separately in your budget as sinking funds; see Budget (`personal/budget`).

## 2. Essential monthly expenses

<!-- Guidance: List only what you would still pay if income stopped and you cut back hard. Use bank statements from the last three to six months, not guesses. Pitfall: using total spending, which makes the target too large to reach, or forgetting irregular essentials such as insurance paid yearly (divide by 12). -->

| ID | Category | Monthly amount | Notes |
|---|---|---|---|
| EXP-001 | Housing (rent or mortgage) | [Amount] | |
| EXP-002 | Utilities (energy, water) | [Amount] | |
| EXP-003 | Food and basic household items | [Amount] | Cut-back level, not today's level |
| EXP-004 | Transport to work or job search | [Amount] | |
| EXP-005 | Insurance premiums (monthly equivalent) | [Amount] | |
| EXP-006 | Childcare and school costs | [Amount] | |
| EXP-007 | Minimum debt payments | [Amount] | From the Debt Payoff Plan |
| EXP-008 | Phone and internet | [Amount] | |
| EXP-009 | Medical and prescriptions | [Amount] | |
| EXP-010 | Other essentials | [Amount] | |
| | **Total essential expenses (E)** | **[Sum]** | |

*Example (Ellison household, USD per month):*

| ID | Category | Amount |
|---|---|---|
| EXP-001 *(Example)* | Mortgage payment (principal and interest; final payment 2042-03) | 1,950 |
| EXP-002 *(Example)* | Property tax and home insurance | 450 |
| EXP-003 *(Example)* | Utilities | 420 |
| EXP-004 *(Example)* | Groceries and household | 1,100 |
| EXP-005 *(Example)* | Transport: fuel, maintenance, public transport | 380 |
| EXP-006 *(Example)* | Car loan | 330 |
| EXP-007 *(Example)* | Student loan | 160 |
| EXP-008 *(Example)* | Credit card B minimum payment | 100 |
| EXP-009 *(Example)* | Insurance premiums (life, health, disability) | 410 |
| EXP-010 *(Example)* | Childcare and school costs | 500 |
| EXP-011 *(Example)* | Phone and internet | 200 |
| | **Total (E)** *(Example)* | **6,000** |

Check: 1,950 + 450 + 420 + 1,100 + 380 + 330 + 160 + 100 + 410 + 500 + 200 = 6,000, the essential spending in the Ellisons' Financial Plan (`personal/financial-plan`) and Net Worth Statement (`personal/net-worth-statement`). Flexible spending of USD 1,250 a month (eating out, clothes, gifts, hobbies, subscriptions, the holiday fund) is what they would cut in an emergency.

## 3. Risk factors and number of months

<!-- Guidance: The right size depends on how likely and how long a loss of income could be, and on what other protection you have. Many consumer guides suggest three to six months of essential expenses; some households need more. Pitfall: copying someone else's number without looking at your own risks. -->

Answer each question and note how it moves your target. The scoring below is a simple household heuristic for discussion, not a rule.

| ID | Question | Your answer | Effect on months |
|---|---|---|---|
| RF-001 | How many earners does the household have? | [One / Two or more] | One earner: add months |
| RF-002 | How stable is each income (salaried, contract, self-employed, commission)? | [ ] | Variable income: add months |
| RF-003 | How long would it take to find similar work in your field and area? | [Months] | Longer search: add months |
| RF-004 | Do you have dependants (children, parents)? | [ ] | Yes: add months |
| RF-005 | Do you have income protection, unemployment benefit or severance pay? | [ ] | Strong cover: fewer months |
| RF-006 | How large are your insurance deductibles (excess amounts)? | [Amounts] | Make sure the fund covers the largest one at least |
| RF-007 | Do you own a home or an older car (repair risk)? | [ ] | Yes: add months |
| RF-008 | Is anyone in the household in poor health? | [ ] | Yes: add months |
| RF-009 | Would losing a job raise any essential cost, for example health cover that is now paid by the employer? | [Cost and amount] | Yes: add that cost to E for the months of a job search |

| Profile | Suggested starting point for discussion |
|---|---|
| Two stable salaried incomes, no dependants, good cover | About 3 months |
| One income, or dependants, or a home to maintain | About 4 to 6 months |
| Self-employed, commission or seasonal income, or a single earner with dependants | About 6 months or more |

*Example:* the Ellisons have two salaried earners (RF-001) with stable pay, although Jordan's shift allowances vary by up to USD 300 a month (RF-002). They have one child (RF-004), Jordan's mother may need help from about 2030, and they own a home and run a second car that will be 14 years old in 2029 (RF-007). Sam's job includes one month of severance pay (RF-005). The family's health cover comes through Jordan's employer, and keeping it after a job loss would cost more than today's payroll share (RF-009). Two incomes would point to about three months; the child, the mortgage and the older car push them to **6 months** (m = 6), the figure in their Financial Plan.

## 4. Target amount

<!-- Guidance: Multiply, then round. Show the starter goal and any intermediate milestone so progress is visible early. Pitfall: setting only the final target; a first milestone that can be reached in a few months keeps motivation up. -->

$$
T = E \times m
$$

where $T$ is the target, $E$ the essential monthly expenses (section 2) and $m$ the number of months (section 3).

| Milestone | Definition | Amount |
|---|---|---|
| M1 Starter fund | [One month of E, or a fixed starter amount] | [Amount] |
| M2 Halfway | [Half of T, or three months of E] | [Amount] |
| M3 Full target | T | [Amount] |

*Example (Ellison):* $T = 6{,}000 \times 6 = 36{,}000$ USD.

| Milestone | Definition | Amount *(Example)* |
|---|---|---|
| M1 Starter fund | One month of E | 6,000 (reached before this plan) |
| M2 Halfway | Three months of E | 18,000 (reached: balance on the plan date) |
| M3 Full target | Six months of E | 36,000 |

When credit card B is cleared in 2027-03 (Debt Payoff Plan), its USD 100 minimum disappears from E, which becomes 5,900 and would give a target of $5{,}900 \times 6 = 35{,}400$ USD. The Ellisons keep the 36,000 target and treat the USD 600 difference as a small margin; they recompute fully when the car loan ends (section 10).

## 5. Where the fund is held

<!-- Guidance: The fund must be safe (protected by a deposit insurance or guarantee scheme where one exists), available within a few days, and separate from your everyday account so it is not spent by accident. Pitfall: investing the emergency fund in shares or long fixed-term deposits; the money may be worth less, or locked, exactly when you need it. -->

| ID | Tier | Account type and provider | Share of fund | Access time | Protected by | Interest rate |
|---|---|---|---|---|---|---|
| ACC-001 | Tier 1: immediate | [Instant-access savings account] | [For example one month of E] | Same day | [Deposit protection scheme] | [Rate] |
| ACC-002 | Tier 2: short notice | [Savings account, or notice account of 30 days or less] | [Rest of the fund] | [Days] | [Scheme] | [Rate] |
| ACC-003 | Tier 3: optional | [Short-term government savings product, if available locally] | [ ] | [ ] | [ ] | [ ] |

Checklist for choosing an account:

- [ ] The provider is licensed and the account is covered by the local deposit protection scheme, within the scheme's current limit per person and per institution.
- [ ] Money can be moved to your everyday account within [two] working days without a penalty.
- [ ] The account is in a separate bank, or at least a separate named account, from daily spending.
- [ ] There are no monthly fees that eat the interest.
- [ ] Both partners know where the account is and how to reach it (record it in the Emergency Document File, `personal/emergency-document-file`, never with passwords in plain text).
- [ ] Keep only a small amount, if any, as physical cash at home, and store it safely.

*Example (Ellison):* today the whole USD 18,000 sits in one savings account at their main bank. They keep one month of essentials (6,000) there as Tier 1 and move the rest, and all new saving, to Tier 2: a savings account at a second, deposit-protected online bank paying a higher rate. The USD 1,000 car replacement savings stays in its own account because it is a sinking fund, not emergency money. Interest earned is ignored in the build schedule below, which keeps the schedule slightly conservative.

## 6. Build schedule

<!-- Guidance: Decide how much you save each month and from which source, and work out when each milestone is reached. Automate the transfer for the day after payday. Pitfall: planning a contribution that leaves no room in the budget, then stopping after two months. -->

Months needed to reach a target from the current balance:

$$
n = \left\lceil \frac{T - B}{c} \right\rceil
$$

where $B$ is the current balance, $c$ the monthly contribution and $\lceil \cdot \rceil$ means "round up to the next whole month". Add any one-time money (tax refunds, bonuses, gifts) as it arrives.

| ID | Source of money | Amount | Frequency | Start | Automated? |
|---|---|---|---|---|---|
| SRC-001 | [Transfer from salary account] | [Amount] | Monthly | YYYY-MM-DD | [Yes / No] |
| SRC-002 | [Share of tax refund or bonus] | [Amount] | One-time | YYYY-MM-DD | n/a |
| SRC-003 | [Payment freed when a debt is paid off] | [Amount] | Monthly | YYYY-MM-DD | [ ] |
| SRC-004 | [Split pay: part of each pay goes straight to savings] | [Amount] | Each payday | YYYY-MM-DD | [ ] |

*Example (Ellison, GOAL-001 in the Financial Plan):* on the plan date (2026-09-30) the fund holds USD 18,000, three months of essential costs. The household saves USD 300 a month (SRC-001) while credit card B is paid off. From 2027-04, when the card is cleared, the card's USD 700 a month (100 minimum plus 600 extra) is added (SRC-003), so the transfer becomes USD 1,000 a month. Interest earned is ignored.

*Trade-off recorded:* card B charges 22.9%, far more than the savings account pays, so the Ellisons put most of their spare money on the card first and keep only USD 300 a month going to the fund, which already covers three months. Once the card is gone, the fund gets priority over the 6.4% car loan and 5.0% student loan.

| Month | Date | Event | Contribution | Balance *(Example)* | Milestone |
|---|---|---|---|---|---|
| 0 | 2026-09-30 | Plan start | n/a | 18,000 | M2 three months already reached |
| 6 | 2027-03 | Card B cleared | 300 | 19,800 | |
| 7 | 2027-04 | Card payment redirected | 1,000 | 20,800 | |
| 15 | 2027-12 | End of 2027 | 1,000 | 28,800 | |
| 22 | 2028-07 | 16th deposit of 1,000 | 1,000 | 35,800 | |
| 23 | 2028-08 | Final top-up | 200 | 36,000 | M3 full target reached |

Checks: 2027-03 is $18{,}000 + 6 \times 300 = 19{,}800$; the remaining gap is $36{,}000 - 19{,}800 = 16{,}200$, which needs $16{,}200 / 1{,}000 = 16.2$ deposits, so 16 full deposits (2027-04 to 2028-07, balance 35,800) and a final 200 in 2028-08. From 2028-09 the USD 1,000 a month is free again; the Debt Payoff Plan (section 6.1, phase 3) and Financial Goals (`personal/financial-goals`) record where it goes.

```mermaid
flowchart LR
    A["2026-09: 18,000, three months"] --> B["2026-10 to 2027-03: 300 a month while card B is paid"]
    B --> C["2027-03: 19,800"]
    C --> D["2027-04 to 2028-07: 1,000 a month"]
    D --> E["2028-08: 36,000, six months"]
```

## 7. What counts as an emergency

<!-- Guidance: Agree the rules together before you need them. A short yes/no list prevents arguments and slow leaks. Pitfall: leaving it vague, so the fund is slowly spent on things that are merely urgent or tempting. -->

Use the fund only if all three answers are "yes":

1. **Unexpected:** we did not know it was coming and could not have planned for it.
2. **Necessary:** it protects health, safety, housing, income or the ability to work.
3. **Urgent:** it cannot wait until we save for it from the normal budget.

| Situation | Emergency? | Reason |
|---|---|---|
| Loss of job or major loss of self-employed income | Yes | Replaces income for essentials |
| Urgent medical or dental cost not covered by insurance | Yes | Health |
| Car repair needed to get to work | Yes | Protects income |
| Boiler, heating or plumbing failure | Yes | Housing and safety |
| Insurance deductible after a claim | Yes | Necessary, unexpected |
| Emergency travel for a family illness or death | Yes, within a limit of [Amount] | Unexpected and necessary |
| Annual insurance premium | No | Predictable: use a sinking fund |
| Holiday, gifts, new phone | No | Planned or optional |
| An investment "opportunity" | No | Not necessary or urgent |
| Paying down debt faster | No | Use the Debt Payoff Plan budget |

For amounts above [Amount], both partners agree before the money is moved.

## 8. Using the fund

<!-- Guidance: Before withdrawing, check cheaper options; after withdrawing, log it. The log shows how often the fund is used and whether the target is right. Pitfall: using the fund and forgetting to plan the refill. -->

Before you withdraw, check:

- [ ] Is there insurance that pays for this? Start the claim first.
- [ ] Can the bill be paid in instalments without interest or fees?
- [ ] Does an employer, public or community programme offer help for this situation?
- [ ] Have we cut non-essential spending for the period of income loss?

Withdrawal log:

| ID | Date | Event | Amount | From account | Approved by | Insurance or other recovery expected | Refill plan |
|---|---|---|---|---|---|---|---|
| WDR-001 | YYYY-MM-DD | [Event] | [Amount] | [ACC-001] | [Names] | [Amount, date] | [See section 9] |
| WDR-001 *(Example, illustrative only, not included in the schedule above)* | YYYY-MM-DD | Car alternator and battery replaced | 900 | ACC-001 | Sam and Jordan | None | Refill in 2 months at 450 a month on top of the normal transfer |

During a long loss of income, write down the monthly draw and how many months the fund still covers: months left equals the balance divided by the reduced monthly spending.

## 9. Refill plan

<!-- Guidance: Decide in advance how the fund is refilled so it is ready for the next event. Pitfall: treating a half-empty fund as the new normal. -->

| Rule | Value |
|---|---|
| Refill priority | [Refill before any extra debt payments or extra investing] |
| Refill contribution | [For example double the normal monthly transfer] |
| Refill deadline | [For example within 6 months of the withdrawal] |
| Use of insurance payouts or refunds | [Paid back into the fund first] |
| If income is still reduced | [Pause refill; keep minimum transfers of [Amount]] |

*Example (Ellison):* if the fund falls below three months of essential costs (USD 18,000) while card B is still being paid, the extra USD 600 card payment pauses until the fund is back at that floor, and goes to the fund instead. This is the same floor rule recorded in the Debt Payoff Plan (guardrail GRD-004).

**How long the fund lasts.** During a loss of income, divide the fund
by the monthly amount you actually need to take from it, not by total
essential spending:

$$
\text{Months covered} = \frac{\text{Fund balance}}{E - \text{Income still arriving}}
$$

*Example (illustrative):* if the Ellisons' fund is full at 36,000 and
one salary continues and pays 3,500 a month of the 6,000 essentials,
the fund needs to supply only 2,500 a month and lasts 36,000 / 2,500 =
14.4 months. If no income arrives, it lasts 36,000 / 6,000 = 6 months.
Recalculate this figure each month of an income loss and write it in
the withdrawal log, so that decisions such as cutting further costs or
taking temporary work are made early, not when the fund is nearly
empty.

Common errors when reviewing an emergency fund:

- Counting money that is not really available, such as a retirement
  account with penalties for early withdrawal, a fixed-term deposit, or
  the car replacement savings that already have a job.
- Keeping the fund in the same account as everyday spending, so that
  its balance drifts down without anyone deciding to use it.
- Forgetting to update E after a new loan, a rent rise or a new child,
  which leaves the target too low.
- Refilling only "when there is money left over". Without a fixed
  refill amount and date, the fund often stays half full for years.
- Investing the fund for a higher return. A fall in prices tends to
  happen at the same time as job losses, which is exactly when the fund
  is needed.

## 10. Review triggers

<!-- Guidance: Review at least once a year and whenever your essential costs or income risk change. Pitfall: keeping an old target after moving home, having a child or changing job. -->

Review the target and the account choice:

- once a year on [month];
- when essential expenses change by more than [10%] (new rent, new child, debt paid off);
- when income risk changes (new job, move to self-employment, partner stops working);
- after any withdrawal larger than one month of essential expenses;
- when the account's rate, fees or protection status changes.

| Review date | Essential expenses (E) | Months (m) | Target (T) | Balance | Change made |
|---|---|---|---|---|---|
| YYYY-MM-DD | [ ] | [ ] | [ ] | [ ] | [ ] |
| 2027-03 *(Example)* | 5,900 | 6 | 36,000 kept (35,400 computed) | 19,800 | Card B cleared; target kept with a 600 margin; transfer raised to 1,000 |

## 11. Local equivalents

<!-- Guidance: Use the names to find the deposit protection scheme and account types in your country. Limits and rules change: check the scheme's own website. Pitfall: assuming deposits above the protection limit, or in an unlicensed app, are protected. -->

Names only, as of 2026-10, examples not exhaustive and not advice. Check local rules and current protection limits with the official body.

| Country or region | Deposit protection scheme (name) | Typical easy-access account names |
|---|---|---|
| United States | FDIC (banks), NCUA (credit unions) | Savings account, money market deposit account |
| United Kingdom | Financial Services Compensation Scheme (FSCS) | Easy-access savings account, cash ISA |
| European Union | National deposit guarantee scheme under the EU Deposit Guarantee Schemes Directive (2014/49/EU) | Savings account (for example Tagesgeld in Germany; regulated savings accounts such as the Livret A in France, which have their own rules) |
| Canada | Canada Deposit Insurance Corporation (CDIC) | High-interest savings account, TFSA savings |
| Australia | Financial Claims Scheme | Online savings account |
| Japan | Deposit Insurance Corporation of Japan | Ordinary deposit (futsu yokin) |
| India | Deposit Insurance and Credit Guarantee Corporation (DICGC) | Savings bank account |
| Vietnam | Deposit Insurance of Vietnam (DIV) | Demand deposit or savings account |
| Singapore | Singapore Deposit Insurance Corporation (SDIC), Deposit Insurance Scheme | Savings account |
| South Korea | Korea Deposit Insurance Corporation (KDIC) | Ordinary deposit or savings account |
| China | Deposit insurance scheme (Deposit Insurance Regulations) | Demand deposit account |
| Indonesia | Lembaga Penjamin Simpanan (LPS) | Tabungan (savings account) |

## 12. Glossary and references

<!-- Guidance: Define terms once in plain words; add any local term you use. -->

### 12.1 Glossary

| Term | Meaning |
|---|---|
| Deductible (excess) | The part of an insurance claim you pay yourself before the insurer pays |
| Deposit protection | A public scheme that repays depositors up to a limit if a licensed bank fails |
| Essential expenses | Costs you would still pay after cutting everything optional |
| Instant-access account | A savings account you can withdraw from at any time without penalty |
| Milestone | An intermediate target used to track progress |
| Notice account | A savings account that needs advance notice before withdrawal |
| Sinking fund | Money saved bit by bit for a known future cost, kept apart from the emergency fund |
| Starter fund | A small first emergency balance built before the full target |

### 12.2 References

| Reference | Version or date checked | Use |
|---|---|---|
| Consumer Financial Protection Bureau, "An essential guide to building an emergency fund", consumerfinance.gov | Page last modified 2025-10-29, checked 2026-10-25 | Steps: savings habit, cash flow, one-time money, automation, safe account, defining emergencies (US public domain; own wording) |
| Consumer Financial Protection Bureau, Your Money, Your Goals toolkit (savings tools) | Checked 2026-10-25 | Starter goals and milestones concept |
| Ready.gov (FEMA) with Operation HOPE, Emergency Financial First Aid Kit (EFFAK) | Checked 2026-10-25; use the date shown on the live page | Companion preparedness checklist; see Emergency Document File |
| Directive 2014/49/EU on deposit guarantee schemes, EUR-Lex | Check the consolidated text | Name of the EU framework in section 11 |

## Standard and licence note

Based on public-domain consumer guidance from the US Consumer Financial Protection Bureau (consumerfinance.gov) and the Ready.gov Emergency Financial First Aid Kit, used for structure and concepts only, with original wording. Deposit protection schemes and account names in section 11 are names only, as of 2026-10; no protection limits are stated because they change: check the official scheme. The months heuristic in section 3 is a discussion aid, not a rule. The fictional Ellison household and every number in it are original examples, not recommendations. This is a document format, not financial, tax, legal or banking advice. Check the current official guidance before use. Template licence: MIT.