An emergency fund is money you save and put aside to cover a financial shock. This could be losing your job, or an unexpected expense such as fixing a broken boiler.
It can give you peace of mind and prevent you needing to take on debt.
How much do I need?
Ideally, 6 months’ essential expenses – for example, rent or mortgage, utility bills and groceries. If you’re just starting out, you could set a smaller target – such as 3 months’ essential expenses – to begin with. Any emergency fund is better than nothing, so don’t be discouraged.