How much should I have in my emergency savings fund?
A good rule of thumb for an emergency fund is to aim for 3–6 months of essential living costs in an easily accessible savings account.
Your emergency fund is there to help cover unexpected events such as losing your job, a period of sickness, reduced income or unexpected family expenses.
The amount you need depends on your personal circumstances, including your income, job security, financial commitments and whether anyone relies on you financially.
- Tom, 24, earning £28,000
Tom rents a room in a shared house, has no children and relatively low monthly commitments. His essential bills come to around £1,200 per month. A suitable emergency fund target might be £3,600–£7,200.
- Saoirse, 38, earning £45,000
Sarah owns a home with her partner and has two children. Her share of essential household costs is around £2,000 per month. She may want to hold £6,000–£12,000 to provide greater financial security for her family.
- Mo, 55, earning £70,000
David is the main earner in his household and is also supporting an elderly parent. His essential monthly expenses are approximately £3,500. A fund of £10,500–£21,000 could help protect against a significant interruption to income.
What if I can’t save that much?
Don’t be discouraged if those figures feel out of reach. Building an emergency fund is a process, not an overnight task.
Many people start by aiming for £500 as a first milestone, then increase it to £1,000 before gradually working towards 3 months worth of expenses. Even a modest emergency fund can help reduce financial stress and prevent the need to rely on expensive borrowing when unexpected costs arise.
The right emergency fund is the amount that would allow you to continue paying your essential bills and living costs if your income stopped unexpectedly. For some people that might be a few thousand pounds, while for others it could be significantly more.
*The case study provided is based on an individual circumstance and the outcomes are not necessarily applicable to everyone as personal situations differ. These examples are shared to illustrate the various areas where we can offer financial signposting and guidance. Please note The Money Guide Service is not regulated by the FCA. Should you require personal advice on your circumstances please refer to a regulated financial adviser regulated by the financial conduct authority.
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