Archive · 8 Sep 2026
How Much Savings Is Enough for Financial Security?
Financial security does not simply mean having a large bank balance.
It means having enough money to keep paying for important things if income suddenly stops.
Experts say to start by adding up monthly necessities and unavoidable bills.
Salaried workers may aim for about six months of expenses, while self-employed people may need nine to twelve months.
Business owners may need six to twelve months, and retirees may want one to two years in easy-to-access, safer investments.
Insurance can help protect savings from large medical bills or the loss of an earning member.
Families with more dependants or only one income may need a larger cushion.
Because prices rise and responsibilities change, people should review their target at least once a year.
The amount needed also changes as people move through different stages of life.
Financial cushions should be based on monthly expenses rather than income, including essentials, EMIs, insurance premiums and school fees.
Salaried employees may need about six months of expenses, while self-employed professionals may need nine to twelve months.
Business owners should target six to nine months, with one year considered safer; retirees may need one to two years in liquid, low-risk investments.
Health and term insurance can reduce the amount savings must cover during major medical or income-related shocks.
The target should be reviewed at least annually because inflation, dependants, responsibilities and life stage can change household needs.
- Who
- Households and individuals planning their emergency savings; the recommendations were provided by Akshay Saapru, Group CEO of FundsIndia.
- What
- Financial planners’ guidance on calculating an adequate savings cushion for income disruptions and unexpected expenses.
- When
- The cushion should be reviewed at least once a year and reassessed as people move through different life stages.
- Why
- To keep a household running when income stops, absorb temporary financial shocks and avoid selling long-term investments at an unfavorable time.
- Calculation basis
- Monthly essential expenses and unavoidable financial commitments, multiplied by the required number of months.
- Salaried employees
- About six months of expenses.
- Self-employed professionals
- About nine to twelve months of expenses.
- Business owners
- At least six to nine months, with one year described as a safer target.
- Retirees
- One to two years of expenses in liquid, low-risk instruments.
- Insurance
- Adequate health and term insurance can reduce the savings burden from major medical or income-related shocks.
- Review frequency
- At least annually, accounting for inflation and changes in household spending.