Emergency fund
Money for a job loss or a medical bill, kept somewhere safe and quick to reach. How much is enough depends on how steady your income is.
Keep $14,000 for emergencies
That’s 7 months of essential spending. You’re $11,000 short: at $500 a month you’ll get there in 22 months.
Where to keep it
Split it so some is instant and the rest earns a little: about a month in a savings account, the rest in a sweep-in deposit or a liquid fund you can redeem within a day.
Not in equity: the emergency and the market fall often arrive together.
How this is calculated
A rule of thumb, not a law: start at 3 months, add 3 if one income supports the household, add 3 if income is variable, and add one per dependent (up to 3). Capped at 12 months.
target = $2,000 × 7 = $14,000
Health insurance does the heavy lifting for medical bills; this fund covers the gaps and the months without income.