It’s recommended you have at least 3 months’ worth of living expenses in an emergency fund. If your total monthly outgoings – including rent or mortgage payments – are £2,000, you should aim to have at least £6,000 set aside. However, the more you can save, the better.
A bigger emergency fund can help make sure you’re able to handle a large financial shock, so you may want to aim for 6 months’ worth of living expenses. If your monthly outgoings are £2,000, for example, you’d ideally have £12,000 in your emergency fund.
It may take you a while to save up, but even a small emergency fund is better than nothing, so don’t be discouraged.
Start by looking back at your expenses over the last 3 months to see how much you spend. Then use a budget to work out how much you could save into your emergency fund each month. You could use our budget planning tool to help.