Most people need three to six months of essential living costs in an emergency fund. For someone spending £1,800 a month on the basics, that is £5,400 to £10,800.
That is the short answer. The useful answer depends on your job, your income and who relies on you, so work out your own number first and then read why it lands where it does.
How quickly you get there will depend a lot on your money personality.
Emergency fund calculator
Work out your target, what you still need, and how long it will take at your current saving rate.
Get your FREE Money Action Plan
Take Our Quiz Now ?
Take Our Quiz Now ?
Table of Contents
Let the latest technology help get you there with the best money savings apps.
What is an emergency fund, and what is it for?
An emergency fund is money set aside for things you cannot see coming: losing your job, the boiler dying, a car repair that stops you getting to work, a vet bill.
It exists so that a bad month does not become debt. Without one, the boiler goes on a credit card, the card carries interest, and a £900 problem quietly becomes a £1,200 one.
Two things it is not. It is not an investment, so it belongs in an instant-access savings account rather than the stock market, where you might have to sell at a loss at the worst moment. Even professional stock trader Michael Taylor, who once nearly lost everything on a suspended stock, says building a cash cushion comes before taking any market risk. And it is not for costs you already know about. Christmas, car insurance and birthdays are predictable, so they belong in sinking funds instead. If you are raiding your emergency fund every December, the two jobs have got mixed up.
Let the latest technology help get you there with the best money savings apps.
How much should be in your emergency fund?
Three to six months is the standard guide, and the range exists because circumstances differ enormously.
Closer to three months if you have secure employment, a second income in the household, and no dependants. You could realistically replace your income quickly.
Closer to six months if you have a mortgage, children, or a single income covering the whole household.
Six to twelve months if you are self-employed, on a zero-hours or seasonal contract, or your income swings month to month. Irregular income is exactly the situation a buffer exists for.
Note that it is essential costs, not your whole salary. Rent or mortgage, bills, food, transport, insurance and minimum debt payments. Not holidays, subscriptions or eating out, because in a genuine emergency those stop.
The gap between three and six months is worth being honest about. Six months of cover for most households is several thousand pounds and takes years to build. Three months in place beats six months you never get round to starting.
How to build an emergency fund from nothing
Treat it as a bill rather than whatever is left at the end of the month, because there is never anything left at the end of the month.
Start with one month, not six. The full target is demoralising from a standing start. One month of essentials already covers most of what actually goes wrong.
Move the money the day after payday with a standing order, so it goes before you can spend it.
Keep it separate and boring. A named pot away from your current account, instant access, earning interest. Separation matters more than the rate: money you can see in your main balance gets spent.
Use windfalls. A bonus, a tax refund or a birthday gift moves you months forward in one go without touching your monthly budget.
The Gains App lets you set an emergency fund goal and track it alongside anything else you are saving for, and with some accounts, such as Monzo, you can link a savings pot so the balance updates as you pay in. Get the app.
Get your FREE Money Action Plan
Take Our Quiz Now ?
Take Our Quiz Now ?
What to do in a financial emergency without a fund
If something has already happened and the fund is not there yet, the order matters.
Work out what you actually need this month, not this year: rent or mortgage, energy, food, transport, minimum debt payments. Everything else can pause.
Check what you are entitled to. Plenty of people miss support they qualify for because they assume they will not.
Talk to whoever you owe before you miss a payment rather than after. Lenders have far more options available for someone who contacts them early.
And get free advice rather than paying for it. Citizens Advice and StepChange are free, independent and used to this.
Let the latest technology help get you there with the best money savings apps.
FAQs
Get your FREE Money Action Plan
Take Our Quiz Now ?
Take Our Quiz Now ?
The short version
Start with one month of essentials. Automate it, keep it separate, and leave it alone.
Once it is there, the predictable stuff belongs in sinking funds, so the emergency money only ever gets touched by an actual emergency.
Share on social media
Disclaimer: Content on this page is for informational purposes and does not constitute financial advice. Always do your own research before making a financially related decision.
