How much emergency fund do freelancers need?

Freelancers typically need 6-18 months of expenses depending on income volatility, client concentration, and industry seasonality. The traditional 3-6 month rule doesn't account for irregular income. Use our free calculator to get your personalized number based on your actual financial situation.

Why is the 6-month emergency fund rule wrong for freelancers?

The 6-month rule assumes steady income, which doesn't apply to freelancers. Freelancers face income volatility, client concentration risk, seasonal fluctuations, and irregular payment cycles. Our calculator uses Monte Carlo simulation to factor in these real-world risks and calculate your actual buffer need.

What is Monte Carlo simulation for emergency funds?

Monte Carlo simulation runs thousands of scenarios with your income and expense patterns to calculate the probability of running out of money. Instead of using generic rules, it gives you a data-driven emergency fund target (R*) that keeps your risk of financial ruin below your chosen threshold.

Is Freelancers Calculator free?

Yes, the core emergency fund calculation (R* Required Buffer and ruin probability) is free forever. Pro features ($12/month) add higher precision simulations, unlimited scenarios, PDF export, and deeper risk attribution for serious freelancers.

What information do I need to use the freelance emergency fund calculator?

You'll need: monthly income range (min/mode/max), fixed and variable expenses, current emergency fund balance, tax reserve percentage, and optional details like client concentration, seasonal patterns, and spike expenses. The calculator works with estimates - perfect precision isn't required.

Freelancers Calculator — Emergency Fund Calculator for Freelancers & Gig Workers

Multi‑select with Ctrl/Cmd or Shift. List auto‑updates after each run.

Inputs

Profile Freelancer Preset Currency i Country i

Active Pipeline Confirmed Contracts Pipeline Confidence % Avg Collection Days

Income (Triangular) Min Most Likely Max Bad Month %

Expenses Fixed / Month Variable Mean Variable +/- % Spike Probability % Spike Amount

Job Loss Monthly Hazard % Downtime Min (months) Downtime Max (months)

Risk Target Horizon (months) Max Ruin Probability % Current Buffer Monthly Save Plan

Freelancer Tax Reserve % Smoothing Reserve % Prior-Year Tax Paid VAT / GST Toggle VAT Rate Override %

Seasonality Amplitude +/- % Peak Month (1–12)

Client Concentration Risk Top Client Share % Monthly Loss Hazard % Loss Downtime Min (months) Loss Downtime Max (months)

Client Health Payment History Client Revenue Share %

Sensitivity & Live Live Recompute Auto Refresh Deterministic Seed Seed

Variable +/- % Spike Probability % Job Loss Hazard % Monthly Save Plan

Adjust sliders to explore what-if effects. Live mode uses fewer simulations for speed.

Auto-saved

Model Details

We approximate monthly net cash as Normal(μ, σ²) for a closed-form buffer estimate, then refine via Monte Carlo with your custom distributions (income, expenses, spikes, job loss). All computations run locally; no data leaves your browser.

Glossary / Parameters

R*: Minimum starting buffer keeping ruin probability ≤ ε over the horizon.
Income Triangular (min/mode/max): Assumed shape for monthly gross receipts.
Fixed Expenses: Predictable mandatory outgoing cash each month.
Variable Mean & ±%: Average flexible spend plus symmetric variability band.
Spike Probability / Amount: Low‑frequency large expense event model.
Monthly Hazard (Job Loss): Independent chance of income dropping to zero that month; triggers downtime.
Downtime Min/Max: Range of months with zero income if hazard triggers.
Horizon: Months you want to survive without going negative.
Max Ruin Probability (ε): Acceptable chance of ever hitting a negative balance within horizon.
Closed‑Form R*: Fast analytical approximation ignoring discrete spike/job loss structure.
Monte Carlo R*: Simulation-based estimate honoring your full distribution assumptions.
P5 Path: 5th percentile balance path—stress trajectory.
Pipeline: Signed work value released stochastically after collection delay at expected conversion %.
Smoothing Reserve: Skim of above-baseline income used to top up below-baseline months.
Payment Delay: Portion of income probabilistically deferred 1 month (receivables bucket).
R* Confidence Interval: Bootstrap percentile band across repeated R* searches (80/90/95%).
Risk Attribution: ΔR* (or Δ ruin probability) removing each risk source, normalized.

Itemized Incomes & Expenses (optional)

Add your clients/services and expense categories. Click Apply to populate the main inputs (income min/mode/max, fixed, variable).

Income Items

Expense Items

Auto‑apply Fills the income & expense inputs automatically.

Results

—Required Buffer R* i

Monthly Cash Flow Breakdown

Income allocation: fixed, variable, expected spike reserve, planned saving, residual or shortfall. Spike slice uses expected value (p * amount). Job loss not included in averages here.

Risk Contributors

Shares based on how much each risk source raises R* versus a counterfactual with that source removed (normalized deltas).

Net Equation Map i

Risk Drivers (Tornado)

Impact More drivers

Closed-Form R*i
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Monte Carlo R*i
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Ruin Prob (Current Buffer)i
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Quality Visualizes how ruin probability decays as starting buffer increases (helps judge diminishing returns beyond R*).

Histogram of the first month balance goes negative starting from your current buffer. “Never” bucket shows sims that stayed solvent through the horizon.

Computation Timings

Phase	ms	%
Total

Worker + simulation phases; live mode uses fewer sims.

Show P5–P95 confidence band

Privacy & Local Analytics Enable local anonymous usage counters (never sent off-device)

AI Prompt Creator

Export your scenario as a structured prompt for deeper AI analysis. Get personalized insights, explore what-if scenarios, and receive strategic recommendations.

Disclaimer: We do not transmit your data to any AI. If you choose to copy/paste into a third‑party AI, do not include personal or sensitive information. This optional feature is provided for accessibility and workflow convenience; use is at your discretion.