How many months will your savings last if the salary stops?
Months = money you can spend ÷ what still leaves, EMI included. EPF stays out of that division.
A sketch of the arithmetic, not a forecast, not credit advice, and not an instruction to miss a payment or to file an EPFO claim. The rules below are a reading of EPFO's December 2018 notification and the member FAQ. Check epfindia.gov.in before you file.
The division, without the salary in it
Put the spendable savings on top. Put the monthly hole underneath. Spendable savings are the savings account, a sweep deposit, a liquid fund, and the stocks or equity funds you have already decided you would sell. A holding you will not sell in a bad month is not in the numerator. The hole is rent or society, food, utilities, school fees averaged across the year, insurance that falls due, the transfer to parents, and every EMI.
Months of runway = spendable savings ÷ (living costs + EMI + any transfer that does not stop). Do not divide by in-hand salary. The salary is the number that just became zero.
A household with ₹1,85,000 in-hand and ₹90,000 leaving has a ₹90,000 problem, not a ₹1,85,000 problem. Six months of salary would be ₹11.1 lakh. Six months of the hole is ₹5.4 lakh. Mixing those two targets is how a savings account that looks responsible fails the 5th.
Two books, same arithmetic
| Public sketch | Tighter book | |
|---|---|---|
| In-hand, while the job stays | ₹1,85,000 | ₹1,20,000 |
| What leaves before EMI | ₹70,000 | ₹55,000 |
| EMI | ₹20,000 | ₹42,000 |
| Hole if salary is zero | ₹90,000 | ₹97,000 |
| Cash, funds, stocks | ₹8,00,000 | ₹3,00,000 |
| EPF, kept out of the months | ₹4,00,000 | ₹6,00,000 |
| Cash months (no return) | 8.9 | 3.1 |
8.9 months is ₹8,00,000 ÷ ₹90,000. 3.1 months is ₹3,00,000 ÷ ₹97,000. Neither figure includes a return, and neither figure spends the EPF. The tighter book has the larger PF balance and the shorter runway. That is the usual salaried shape: the retirement line grew because the contribution was compulsory, and the savings account was whatever was left after the EMI.
What 8.9 months looks like on a calendar
Start from ₹8,00,000 and take out ₹90,000 a month, with nothing earned and nothing else arriving. After three months about ₹5,30,000 is left. After six months about ₹2,60,000 is left. The eighth month still covers the ₹90,000 debit. The ninth month does not: ₹80,000 is left against a ₹90,000 hole, so the pile fails during that month. A 12% return changes the later months. A spouse's salary, if it is actually still coming in, changes the hole. An EPF claim changes the pile on the day it is credited, not on the day you remember the passbook. None of those create a new ₹8,00,000 on the morning the salary stops.
Six months of expenses is a target, not a measurement
The sentence most guides repeat is 'keep six months of expenses.' It is a target for how large you want the pile to be. It does not tell you how large the pile is. A single earner with an EMI and parents on a monthly transfer has a wider hole than a two-income household with no loan. Six months of the first hole is a much larger rupee number. Measure the pile you have with the division above. Use six months, or nine, as the pile you are building toward, once you know the hole.
- One income, an EMI, and a parents' transfer: build past six months of the hole. The second income is not there to cover a gap.
- Two incomes and no EMI: a shorter pile can still be honest, because one salary may continue. Count only the income that would actually continue.
- A new loan: rebuild the months against the new hole before you treat the surplus as investable.
Where the months should sit
Keep a slice you can move the same day, in the savings account or a sweep deposit. Keep the rest where it can move in a day or two, in a liquid fund or a short deposit, so the whole pile is not earning a savings-account rate. Equity is a third slice only for rupees you have already agreed to sell. Selling when markets are down is a real cost. Name that cost before those rupees are called months.
A 12% return on the pile while you draw it down lengthens the calendar a little. It does not turn a three-month cash pile into a year. The public sketch uses a 12% return and an 8% yearly hike on the path where the job stays, and it stops the hike when the salary stops. Both numbers are printed on the page so they are not a hidden forecast. Your return and your hike will differ. The division of cash by the hole will not.
Spouse income, bonus, and the loan end date
The five boxes on the public page are in-hand, what leaves, the EMI, what is saved, and EPF. A spouse's salary, if it continues, shrinks the hole. A bonus that may not be paid does not shrink it. An EMI that ends in eighteen months should not be treated as a forever debit, and an EMI with eight years left should not be treated as a short one. The public sketch holds the EMI for eight years so the first answer is conservative. A saved book can hold the real end date, the parents line, and the spouse line separately, which is why the two dates move after you replace the example.
Read the months next to the other two questions
The months are short when the EMI is large. They are fictional when the EPF balance is doing the work inside your head. Those are the other two guides: what happens to the EMI if the job goes, and why the PF passbook is net worth rather than this month's debit. The sketch puts all three on one screen. Change the five numbers if the example is not your book.
No account for the sketch. The free book keeps the date and lets you turn salary to zero on your own figures.
Questions this page answers
How many months of expenses should a salaried person in India keep?
Six months of the real hole is a common target. The hole is living costs plus EMIs plus transfers that do not stop, not the in-hand salary. One income with an EMI needs a larger pile than two incomes with no loan.
Do I divide my savings by salary or by expenses?
By what still leaves: expenses and EMIs. Dividing by salary makes the runway look shorter than the cash problem, and saving 'six months of salary' makes the target larger than the hole.
Should the EMI be inside the monthly number?
Yes. An EMI that continues after the salary stops is part of the hole. Leaving it out is how a three-month pile gets described as six.
Where does EPF go in the sum?
In net worth, outside the months. It is not cash you can debit on the 5th. See the guide on whether EPF is an emergency fund.