Money Talk with Malik | Financial Planning for Builders

Key Takeaways

The standard "3 to 6 months of expenses" rule was designed for W-2 employees with stable jobs — it doesn't apply cleanly to founders, physicians, or anyone with irregular income
The right emergency fund size depends on your income stability, employment type, fixed obligations, and access to other liquidity
High earners often underfund emergency accounts because the expense ratio feels trivial, but liquidity and investment capital serve different purposes
A 2023 Federal Reserve report found that 37 percent of Americans couldn't cover a $400 unexpected expense — the emergency fund is more important than most people act like it is
Where you keep the fund matters as much as how much you have in it

"Three to six months of expenses."

You've heard it a hundred times. It's the most common piece of personal finance advice after "max out your 401(k)." And like a lot of common advice, it's a reasonable starting point that gets applied way too broadly.

I work with people who have completely different financial situations than the person that advice was written for. Let me give you the version that actually fits.

Why the Standard Rule Doesn't Cover Everyone

The 3-to-6-month rule was built around a baseline scenario: you're a W-2 employee, you have a stable job, you get paid every two weeks, and your main risk is that you might lose that job. In that case, having 3 to 6 months of runway buys you time to find a new position.

That's a reasonable framework if you fit that description.

But realistically, most of the people I work with don't fit it cleanly. Founders have lumpy income. Physicians in training are earning below their eventual income while carrying debt. Locum physicians might have income in some months and not others. Post-exit founders sitting on assets might have minimal monthly income until they deploy the capital. Self-employed people of any kind have income variability that changes the math entirely.

The underlying question isn't "how many months of expenses." The question is: how long would it take you to access cash in a real emergency, and what would that emergency actually cost?

How to Calculate Your Number

Start with your actual monthly non-negotiables. Not your full spending, your obligations. Rent or mortgage. Food. Utilities. Debt minimums. Insurance. Transportation. Things you cannot pause.

Now add irregular but predictable big costs: car insurance paid annually, property taxes, estimated tax payments if you're self-employed. Spread these out monthly.

That's your real emergency monthly number. For most people it's lower than their total spending because there's a lot of discretionary spending (eating out, travel, entertainment) that could get cut in a real emergency.

Now ask: what type of emergency are you actually protecting against?

Scenario 1: Job loss. How long does it realistically take someone in your field to find a new position at your level? For a primary care physician it might be 2 to 4 months. For a specialized fintech engineer it could be 2 to 3 months or longer in a down market. For a founder whose company isn't generating income yet, the question is different entirely.

Scenario 2: Medical emergency. What's your out-of-pocket max on your health insurance? What's your disability coverage and when does it kick in? Your emergency fund should cover the gap between an emergency and when other coverage takes over.

Scenario 3: Major unexpected expense. Car transmission, emergency home repair, family emergency requiring travel. These are one-time costs, not income replacement events.

For most people, the answer to these scenarios points to a number somewhere between 3 months and 12 months depending on their specific situation.

Founders: You Need More Than You Think

If your income comes from your company and the company is not yet profitable, your emergency fund situation is different. You don't have a job to go back to. You have a company that may need cash injections. Your personal financial runway and your company's runway are two separate things that both need protecting.

For founders, I generally suggest:

At minimum, 6 months of personal living expenses completely separate from company accounts
More if your company is pre-revenue or you're not drawing a consistent salary
Consider this fund locked and off-limits for company needs — the company has its own cash for that

The failure mode I see is a founder dipping into their personal emergency fund for company expenses during a hard month, then finding themselves with neither personal reserves nor company capital when something real goes wrong. Keep them separate. This is non-negotiable.

High Earners: The Opposite Problem

If you're earning $300,000 a year and you have 6 months of expenses in cash, that might be $60,000 to $90,000 sitting in a savings account. For someone at that income level, that feels like a lot of money to have parked not growing.

Here's the thing. An emergency fund isn't an investment. It's insurance. The cost of that insurance is the opportunity cost of not having that money invested. For a high earner, that cost is real but it's also just the price of stability.

The question isn't "should I keep cash here when I could invest it." The question is "how bad would it be if I had to liquidate investments in a down market to cover an emergency."

Liquidating stocks or index funds at a bad time to cover an unexpected expense is genuinely costly. Keeping the cash earns less but prevents that scenario. Realistically, a high-yield savings account paying 4 to 5 percent today (as of early 2026) isn't a terrible place to park emergency reserves anyway.

Where to Keep It

The goal is liquid, safe, and earning something. Not locked up. Not volatile.

High-yield savings accounts. Standard choice. FDIC insured. Currently paying 4 to 5 percent at providers like Marcus, Ally, or SoFi. Easy to access within 1 to 2 business days.

Money market accounts. Similar to HYSA, sometimes slightly higher yield, also FDIC insured at banks or SIPC insured at brokerages.

Short-term Treasury bills. 3-month T-bills currently yield in a similar range. Slightly less liquid than a savings account but government-backed and marginally higher yield.

What you should not do: keep your emergency fund in a regular checking account earning 0.01 percent, or in a brokerage account where it's subject to market volatility.

The Mistake That Hurts People

The most common emergency fund mistake I see isn't having too little. It's having the right amount in the wrong place, or having it commingled with operating cash.

If your emergency fund is in the same checking account you use for daily expenses, you don't really have an emergency fund. You have spending money that you've mentally assigned a different purpose.

Separate account. Different bank if that helps. Leave it alone until something actually goes wrong.

Summary

The 3 to 6 months rule is a starting point, not a formula. Your actual number depends on how stable your income is, what your genuine emergency scenarios look like, and how quickly you could access other assets if needed.

For founders: 6 months minimum, separate from company cash, locked. For physicians in training: 3 months to start, build to 6 as income grows. For high earners with stable jobs: 3 to 6 months is usually right, but keep it in a HYSA earning real yield. For self-employed or variable income: lean toward the higher end, 6 to 12 months, because income smoothing matters more.

The boring stuff here is just having it in the right place, at the right amount, and leaving it alone. That's the whole move.

Malik Amine is a financial advisor working with tech founders and physicians. This is general education, not personalized financial advice. Your situation is specific — talk to an advisor about what the right number looks like for you.