Set an emergency fund for variable income.
Salaried advice of three to six months of expenses assumes a steady paycheque. Variable income needs more, so the target here scales the base coverage upward with your income volatility — half the volatility percentage, added as an uplift. The months-covered figure translates your existing balance into the only unit that matters during a bad quarter: how long you can pay the bills without new work.
Volatility-adjusted emergency fund
Target = monthly expenses x months wanted x (1 + volatility/200); months covered today = current savings / monthly expenses
This is a general budgeting guide, not financial advice. Appropriate reserve levels depend on your dependants, insurance cover, debts and local safety nets — consider consulting a regulated adviser.
Larger than an employee's. Six months of expenses is a reasonable starting point, uplifted further when income swings widely from month to month.
Somewhere liquid and separate from working capital — an instant-access savings account rather than an investment that could be down when you need it.
No. It covers income interruption and small shocks; large medical, liability or equipment losses still need cover.