Emergency Fund Guide — Sizing, Saving, Keeping
The boring money rule that reliably prevents debt spirals — how to size one for your life, and where to keep it so it works for you.
Three months, six months, or more?
The conventional wisdom is 3–6 months of essential expenses. The right number depends on job stability, dependents, and debt:
- 3 months suits a single person with stable, in-demand employment and no dependents.
- 6 months suits most households with children or a single earner.
- 9–12 months suits freelancers, sole earners in volatile sectors, and anyone with significant fixed outgoings (mortgage + childcare).
Use the emergency fund calculator to see exactly what each option costs based on your monthly expenses.
Where to keep it
The emergency fund should be accessible within 1–3 working days and earn at least close to the savings-market rate. That narrows the realistic options to:
- Instant-access savings account (ideally 4–5% at top rates). Best for the first 1–2 months' worth.
- 32- or 95-day notice account (often 0.3–0.7% higher). Good for the bulk of the fund.
- Cash ISA if you haven't used your ISA allowance elsewhere.
Avoid: Premium Bonds (yield is a lottery, not a rate), Stocks & Shares (short-term volatility could shrink the fund at exactly the wrong moment), and fixed-term savings that can't be accessed.
Sinking funds are not emergency funds
Christmas, car servicing, new boiler, annual insurance — these are all predictable expenses. They belong in separate "sinking fund" pots, not the emergency fund. If you raid your emergency fund every December for Christmas, you don't have an emergency fund — you have a Christmas fund with extra steps.