How many months to hold
Months of essential expenses only: rent, food, transport, insurance, loan payments.
It is not an investment
An emergency fund is the money that stops a surprise, a job loss, a medical bill, a car that dies on the highway, from turning into debt. It earns little and that is fine. Its job is to be there.
Step 1: work out your floor
Add up essential expenses only: rent, food, transport, insurance, loan payments. Not your whole lifestyle, just the floor. Grownz shows this figure once your budgets are set, because the essential categories are the ones you have marked.
Step 2: pick a number of months
Aim for three to six months of that floor. Three if your income is steady and you have a second earner in the household. Six if you are self-employed, on contract, or the only income. Grownz holds the target in the planner settings.
Step 3: keep it boring and instant
A savings account or a liquid fund. If you would have to sell something to reach it, it is not an emergency fund. Hold it under the cash asset class in Grow so the planner counts it correctly and does not treat it as passive income.
Step 4: fund it before you invest
Money that goes into equity before the floor is covered is money you may have to sell at the worst moment. The order matters more than the amounts.
Step 5: refill it without guilt
Using the fund is what it is for. Refill it from the next few months of savings and carry on.
