How much do you need?

The standard guidance is three to six months of essential expenses. Essential expenses are: rent or mortgage, bills, food, transport to work, debt minimums and any other costs you could not cut immediately in a crisis.

If you are employed: three months is a reasonable target. If you are self-employed, in a niche field, or in a volatile sector: aim for six months.

How to calculate your target

Step 1: list your essential monthly costs (housing, energy, food, transport, loan minimums). Step 2: multiply by three (or six). This is your emergency fund target.

Example: if your essentials total £1,500/month, your target is £4,500 (three months) or £9,000 (six months). Do not include discretionary spending.

Where to keep an emergency fund

An instant-access savings account. NOT a current account (too easy to spend), NOT a stocks and shares ISA (value can fall), NOT locked away in a fixed-rate account (defeats the purpose).

The best current rates on instant-access savings change regularly. Use the Moneyfacts or MoneySavingExpert comparison for current best buys.

How to build one from scratch

Start with a target of £500-£1,000. This covers most minor emergencies (car repair, boiler callout, appliance replacement). Then build towards the full target gradually.

Even £50/month is meaningful — it builds to £600 in a year. The habit matters as much as the amount in the early stages.