Calculator · Cash reserves
How big should my emergency fund be before I quit?
Written by Project OptionalLast reviewed
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The short answer
Long enough to cover the gap you are creating on purpose, plus a realistic re-entry period.
Every extra month beyond that is a month of contributions that went to a savings account instead of the market, so the cushion has a price and the price is time.
Calculator
Enter your spending and cash
Enter what you have, what you spend, and how many months of runway you want. The result shows the gap, how long it takes to fill from contributions, and what those diverted months do to the year work becomes optional.
Runway today
2.9 mo
Cushion you want
6 mo
$25K
Still to save
$13K
Cost in time
5 months later
Months of runway you want
Cushion target
$25K
Months of contributions diverted
9
Delay to Optional
5 months later
Filling the gap takes about 9 months of contributions going to cash instead of the market. That is the real price of the cushion, and it buys you 6 months of being able to say no.
Assumes a 7% average real return (after inflation) and a 4% withdrawal rate. Cash held in the cushion is treated as sitting still rather than compounding.
Two different funds wearing one name
The emergency fund most advice describes exists for things that happen to you. A tire, a boiler, a deductible. The CFPB suggests starting at $500 and building toward $1,000, because research shows even a few hundred dollars changes how a household absorbs a shock.
What you need before quitting is a different instrument with the same name. You are not insuring against a surprise. You are deliberately switching off your income for a known period and planning to switch it back on. The number that matters is the length of that gap, not a general rule about months.
Conflating the two is why people leave with a fund sized for a car repair and discover in month four that they are selling investments to buy groceries.
What a cushion costs
Cash does not arrive from nowhere. Building a runway means sending contributions to a savings account instead of the market until the target is met, and the portfolio goes unfed for those months.
That is the trade this page exists to make visible. Six months of expenses at $4,200 a month is $25,200. Starting from nothing, at $1,500 a month, that is about 17 months of deposits that never reached the market. Starting part-funded it is less, which is the first thing worth checking before you treat the number as a wall.
None of which argues for a smaller cushion. It argues for choosing the size on purpose rather than inheriting it from an article, because the difference between six months and twelve is not free and most people have never seen the bill.
How many months
Three things set the number, and none of them is a rule of thumb.
The length of the break. If you plan to be out for a year, a six-month cushion is not a cushion. It is half a plan.
How long it takes to get hired again. Senior roles and narrow fields take longer. This is the part people shorten because it is unpleasant to think about, and it is the part that decides whether the plan survives contact.
What you would do if it ran out. If the answer is selling investments, the cushion needs to be longer, because that sale is expensive. If the answer is part-time work you would do anyway, it can be shorter.
Worked example
Case study — Marcus, 38
Spends $4,200 a month. Has $12,000 in cash and contributes $1,500 a month to a portfolio of $180,000. He wants to leave a job with no role lined up and is deciding between a six-month and a twelve-month cushion.
Runway today
2.9 mo
6-month cushion
$25,200
12-month cushion
$50,400
Gap to 12 months
$38,400
How this works in a saved plan
The dashboard already works out your runway from what you hold. It counts cash and taxable brokerage as the liquid part and leaves home equity out, because equity will not pay a grocery bill in March.
Sources
- CFPB — An essential guide to building an emergency fundThe $500 starting goal and the $1,000 follow-on, and the point that the right amount depends on the costs you actually face.
- CFPB — Emergency savings and financial security (2022)Research on how small balances change a household’s ability to absorb a shock.
Common questions
Is three to six months enough?
It is advice for a shock that arrives while you are still earning. For a planned break, the number that matters is the break plus a realistic re-entry period, which is usually longer than either figure.
Does a taxable brokerage count as runway?
Partly. There is no penalty for reaching it, which makes it better than a retirement account here. Spending it still means selling investments, which costs more than it looks like it does.
Should the cushion sit in a high-yield savings account?
Somewhere you can reach in a day without selling anything. The model treats cushion cash as not compounding, which is deliberately conservative, so any yield you do earn makes the real answer slightly better than the one shown.
What if I already have more than I need?
Then the calculator shows no gap and no delay. Cash beyond the runway you have chosen is not buying coverage, and the app counts investable cash toward Optional either way.
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Watch the runway instead of recalculating it.
The dashboard works out how many months your cash and taxable accounts would cover, and updates it as your balances move.