“Six months of expenses.” Every personal finance article in the country says it, and not one of them tells you which expenses. Does the home loan EMI count? The school fees you pay in April and September but not monthly? The ₹35,000 in SIPs — they leave your account every month, are they an “expense”? Depending on how you answer, the same household's emergency fund target can swing from ₹3.5L to ₹10L. That's not a rounding error. That's the difference between a fund that works and one that doesn't.
So let me answer it the only way it can honestly be answered — line by line, with a real household. A couple I work with in Pune, both 38, two kids in school, combined take-home of ₹2.3L a month. We built their number last year. Here's every line and the ruling on each.
The test: what must still be paid if the income stops
That's the whole principle. An emergency fund isn't six months of your lifestyle — it's six months of your obligations. If a payment can be paused tomorrow with no penalty and no damage, it doesn't belong in the number. If skipping it wrecks your credit, your kids' schooling, or your insurance cover, it does.
The rulings, line by line
Home loan EMI, ₹46,000 — counts. This one shocks people, because a lot of mental math runs “expenses minus EMI.” Backwards. The EMI is the single most non-negotiable line in the budget; miss three and you're dealing with your bank's recovery cell in the same month you lost your job. Car EMI, ₹12,500 — counts, same logic.
School fees — counts, at ₹15,800 a month. The family pays ₹1.9L a year across two kids in lumpy installments. Divide by twelve and carry it monthly, because the fee installment doesn't care that it arrived during your notice period. Lumpy annual costs are exactly what emergency funds get caught out by.
Groceries, utilities, fuel, house help — ₹34,000 — counts, obviously. Insurance premiums — counts, at ₹7,200 a month. Their term and health premiums total ₹86,000 a year, and letting a health policy lapse during a job loss is about the worst financial own-goal available — it can reset your waiting periods.
SIPs, ₹35,000 — doesn't count. This is where most people overshoot. A SIP is pausable in two clicks with zero penalty; it's the designed shock absorber. Sizing your emergency fund to protect your investments means holding lazy cash so your working money can stay invested — the logic eats itself. Dining out, OTT, weekend spends, ₹18,000 — doesn't count either, but I don't pretend it goes to zero. Nobody unemployed spends nothing on living. I add a flat ₹5,000 buffer instead of the full amount.
The number
Add it up: 46,000 + 12,500 + 15,800 + 34,000 + 7,200 + 5,000 = ₹1,20,500 a month. Six months of that is ₹7.2L. Note what happened: the “expenses minus EMI, minus fees” version of this calculation gives about ₹3.5L — half a real fund — while “six months of take-home” gives ₹13.8L, nearly double what's needed, with the excess earning 3% in savings when it could be working. Both popular shortcuts miss, in opposite directions.
Two adjustments I make routinely. Single-income household, or income that's variable — a business, commissions — and six months becomes nine; this couple is dual-income in different industries, so six holds. And the fund doesn't live in a savings account: for them it's one month's worth in savings and the rest split between a sweep FD and a liquid fund, reachable inside a day without being idle.
If you do one thing after reading this, do the line-by-line exercise on your own statement — it takes twenty minutes and it's the first page of any real financial plan anyway. “Six months of expenses” only becomes advice once you've decided what's on the list.
This is a general account of a real, anonymised household for educational purposes and isn't personalised advice — the right emergency fund size depends on your own income stability and obligations.