Emergency Fund Ratio Calculator

Formula

The formula to calculate the Emergency Fund Ratio (EFR) is:

\[ EFR = \frac{EF}{ME} \]

Where:

Emergency Fund Ratio (EFR): The ratio that indicates how many months your emergency fund can cover your monthly expenses.
Total Emergency Fund Amount (EF): The total amount of money set aside for emergencies.
Total Monthly Expenses (ME): The total amount of money spent on monthly expenses.

Let's say the total emergency fund amount (EF) is $10,000 and the total monthly expenses (ME) are $2,000. Using the formula:

\[ EFR = \frac{10000}{2000} \]

We get:

\[ EFR = 5 \]

So, the emergency fund ratio is 5, meaning your emergency fund can cover 5 months of expenses.