3 minute read

Building an emergency fund - how much is enough?

How much do you need?

Whether you call it a rainy day fund, emergency fund or safety net, we can all benefit from having some money set aside for any unexpected expenses or negative financial events.

Having an emergency fund helps to reduce stress and worry about the ‘what ifs’ in our future. It means we can cope with financial shocks without needing to turn to high-cost debt that can quickly spiral into an overwhelming amount.

But it’s easier said than done, especially when most financial planners say you should have around 3 months of expenses set aside. 

You could base the amount you think you’ll need on the expenses you think you might have to cover in future. The Money Advice Service’s Unexpected Cost report shows the average cost of expenses, and how common they are:


Percentage of people who experienced this expense in the last 12 months

Mean average cost

Car repair or replacement



Opticians or glasses cost



Technology breakdown



Vet bills or pet costs



Washing machine



Lending to family or friends



Emergency dentist bills



Emergency home repairs



Children costs, like school trips and replacement clothes



Mobile phone breakdown



Boiler repair or replacement



Unscheduled events and weddings



Tax bills



Legal bills






None of these




How to build it up
It can feel easier said than done to build up an emergency fund of several months’ pay. Here are our top tips:

Start small and build up
Rather than going too big too soon with the goal of saving three months’ expenses, start with just a £100 savings pot. Once you’ve got there, aim for £500, then 1 month, then 3 months and finally even 6 months if you are sole earner, work in a specialised field or risk averse.

Keep the money separate
Avoid the temptation to spend your emergency fund on non-emergencies by opening a new account or pot for this specific purpose. Ideally it will be somewhere that you can access easily, but still gives you some interest. If you have the ability to pay for an expense on a credit card, you could even have your emergency fund in a 30 day notice account. This would mean you can pay an unexpected expense using your card, then get the money out of your account and use it to pay off the credit card bill.

If it helps you to stay motivated, you could have multiple emergency pots - one for car repairs, one for house repairs, one for medical costs.

The easiest way to keep a saving habit is to make it automatic. Set up a standing order to your new emergency fund. It’s best to send the full amount you want to put aside on payday, rather than just relying on saving what is left at the end of your pay cycle.
At Salary Finance, we offer simple savings accounts with contributions straight from your salary, making it completely hassle-free. To see if you are eligible, click here

Put any cost cutting savings or extra income into your emergency fund
If you’re successful in cutting costs, you get a pay rise, or you start a side gig or find a way to get some extra cash - rather than spending the savings you’ve just made, actually put them into your emergency savings account. You’ll thank yourself in future when you have your next unexpected bill!