The standard advice is 3–6 months of living expenses. In practice, your real number depends on three variables: your monthly fixed costs, the stability of your income, and how quickly you could find new work if you needed to.
How to Calculate Your Real Number
Take your monthly essential expenses (rent/mortgage, utilities, insurance, groceries, minimum debt payments, childcare). Multiply by your target months. A renter in a stable tech job with in-demand skills might need 3 months ($15,000). A sole breadwinner with a mortgage and kids might need 9–12 months ($50,000+).
Where to Keep It
Emergency funds belong in liquid, FDIC-insured accounts. High-yield savings account is the right answer. Current best rates: 4.5–5.0% APY. The money is accessible within 1–2 business days — fast enough for an actual emergency, slow enough that it's not tempting to treat it as spending money. Compare the top-rated emergency fund savings accounts for current rates and account features.
Do NOT put emergency funds in the stock market, CDs (liquidity risk), or I Bonds (12-month lockup). Treasury bills are fine for the portion above $10,000 that you won't need for at least 6 months.
The Exception
If your job income is very stable (government, healthcare, tenured academia) and your skills are in high demand, a 3-month fund is fine. If you're in a volatile industry, self-employed, or the sole income in a two-person household, err toward 6–9 months.