Standard advice suggests three to six months of expenses. That range is a starting point, and what determines where you should sit in it – or outside it – is specific to your situation.
What increases the number you need
Irregular income. Freelance and commission-based earnings need a larger buffer than a salary.
A specialised job in a small market, where finding the next one takes longer.
Dependants, since more people rely on the income.
Property ownership, which produces occasional large unavoidable costs.
And a single income in a household, where there is no second earner to absorb a shock.
What decreases it
Stable employment with notice periods and redundancy protection. Two incomes. Low fixed costs, which are what an emergency fund actually has to cover. Access to other resources if needed.
Calculate from expenses, not income
The relevant figure is what you must spend monthly – housing, food, utilities, transport, insurance, minimum debt payments. Not what you currently spend, which includes things you would cut.
That number is usually lower than people assume, which makes the target less daunting.
Where to keep it
Accessible within a day or two, and separate from your current account so it is not spent by accident. A savings account paying whatever interest is available.
Not invested. The point is that it is there in a downturn, which is exactly when investments are down.
Building it
Any amount is better than none. A single month of expenses covers most of the emergencies people actually have.
The caveat
General information about how to think about it, not financial advice for your circumstances.