A guide to building an emergency fund

An emergency fund is money you put away to help you pay for something unexpected.

Ideally, it should be in a savings account you can access quickly if you need it. You might want to keep the money separate from your everyday savings, so you’re not tempted to dip into it.

Think of it as a nest egg to fall back on when those unexpected expenses crop up.

It’s good to have an emergency fund when life throws you a curve ball.

From a leaking roof to a big vet bill, there are some things you just can’t plan for.

Some situations where you might need an emergency fund include:

• losing your job
• medical or vet fees
• home or car repairs.

It’s a good idea to have about 3 to 6 months’ worth of living expenses saved up. This should take into account all your essentials (your total monthly outgoings), including your mortgage or rent.

For example, if your outgoings are £2,000 each month, you should aim to save around £6,000 – £12,000. But don’t be put off if that seems a lot to save – anything you can put aside is better than nothing. 

1. Work out how much you need to save and how long it’ll take you to reach your goal
2. Set up a standing order to move money into a savings account each month
3. Plan for what you class as an emergency, so you're not tempted to spend the money on something else
4. If you do need to take money out of it, make sure you top it back up.

It's worth remembering that your needs and monthly expenses will change throughout your life. So, you'll need to keep checking in on whether your emergency fund is enough for your current lifestyle.