How to build an emergency fund

An emergency fund is money reserved for real problems: income loss, medical costs, urgent home repairs, car issues or a family need. It is not an investment project for high return. It is a financial shock absorber.

The correct size depends on your monthly essential cost, job stability, dependents and access to support. Someone with stable income and low fixed costs may need less than someone self-employed with children and high rent.

How to calculate the target

• Calculate essential monthly costs: housing, food, transport, health, utilities and debt minimums.
• Choose a number of months: usually three to six as a starting point.
• Multiply essential cost by the chosen number of months.
• Add extra buffer if income is variable or if you support other people.

Where to keep it

The emergency fund should be easy to access, low risk and separated from daily spending. In Brazil, people often use conservative fixed-income products with daily liquidity, but the exact product must be checked for risk, tax, fees and redemption time.

You can use the Selic/CDI calculator to simulate how monthly contributions can grow over time. The point is not to chase the highest return; it is to make the target visible.

When to use it

Use it for emergencies, not for predictable expenses that should be budgeted separately, such as annual taxes, planned travel or a new phone. If the reserve is used, the next goal is to rebuild it.