How to build an emergency fund in the UK
4 minute read
An emergency fund is money set aside for surprises: a broken boiler, a car repair or a gap between jobs. It means a bad month doesn't have to go on a credit card.
How much should you aim for?
A common target is three to six months of essential costs: rent or mortgage, bills, food and travel. Add those up from your budget and multiply by three for your first target.
That can feel like a lot. Start smaller: a first goal of £500 or £1,000 already covers many everyday emergencies.
Where to keep it
Keep it separate from your everyday account, so you don't spend it by accident, but somewhere you can get it quickly. Many people use an easy-access savings account or cash ISA. Check the account is with a UK-authorised bank or building society, so it is protected by the Financial Services Compensation Scheme (FSCS).
How to build it
- Pick a monthly amount you can keep up, even if it is £25.
- Move it on payday with a standing order, before you spend.
- Add extras when they come in, like a tax refund or birthday money.
- If you use it, don't feel bad: that is what it is for. Just start topping it back up.
Track your progress
Seeing the total grow keeps you going. In BudgetHive you can make a savings bucket called "Emergency fund", set your target and add to it each month to watch the bar fill up.
Try it with BudgetHive
Type in your take-home pay and BudgetHive suggests a starter budget you can change to suit you.
- Free plan
- No card needed
- No bank login
This guide is general information, not financial advice. BudgetHive is not authorised or regulated by the Financial Conduct Authority. For free, impartial help, visit MoneyHelper or Citizens Advice.