Calculate Your Monthly Expenses for your blog post "How to Build an Emergency Fund in India – Step-by-Step Guide for 2025

📊 Step 2: Calculate Your Monthly Expenses

Before you start building your emergency fund, you need to know exactly how much money you need to survive each month. This step is all about understanding your essential monthly expenses — not your total income or lifestyle spending.

💡 Why Is This Step Important?

Your emergency fund should cover only your basic living expenses, not luxuries like dining out, Netflix subscriptions, or vacations. The goal is to stay afloat during a crisis — job loss, illness, or unexpected bills — by covering your bare minimum costs.

🧾 List of Essential Monthly Expenses

Break down your average monthly expenses into these basic categories:

• 🏠 Rent or Home EMI: The biggest monthly cost for most Indian families.
• 🛒 Groceries & Food: Daily essentials like vegetables, grains, milk, etc.
• 💡 Utility Bills: Electricity, water, gas, and mobile/internet bills.
• 💊 Medical Expenses: Health insurance premium or regular medications.
• 🚇 Transportation: Fuel, metro/bus fares, vehicle maintenance.
• 📚 Child’s School Fees: If you have kids, include tuition and essential education costs.
• 💳 Loan EMIs: Only include EMIs for essential loans (home, education). Exclude credit card bills from luxury purchases.

📘 Example Calculation

Here’s an example of monthly essential expenses for a small family living in an Indian metro city:

Expense Category	Estimated Monthly Cost (₹)
Rent	₹15,000
Groceries	₹6,000
Electricity & Gas	₹2,000
Internet & Mobile	₹1,000
Transportation	₹2,500
Medical Needs	₹1,500
School Fees	₹3,000
EMIs (Essential)	₹4,000
Total	₹35,000

➡️ In this example, your target emergency fund should be:

• For 3 months: ₹1.05 Lakhs
• For 6 months: ₹2.1 Lakhs
• For 12 months: ₹4.2 Lakhs

🛠️ How to Track Your Expenses

If you’re unsure about your actual spending, here’s how to get accurate numbers:

• ✅ Review your bank statements for the last 3 months
• ✅ Check UPI history (Google Pay, PhonePe, Paytm)
• ✅ Use budgeting apps like Walnut, Money Manager, or Monefy
• ✅ Write down expenses daily in a notebook or Excel sheet

📝 Tips for Indian Households

• 👵 If you live in a joint family, calculate your personal share of expenses
• 💰 Keep separate totals for monthly recurring costs and one-time annual costs like insurance
• 🚫 Do NOT include SIPs or investment contributions here — this is only for survival spending

Once you know this monthly number, you're ready to set your emergency fund target. That’s what we’ll do in the next step.