Emergency savings, and the number that actually protects you

An emergency fund is the thing that stops a broken boiler turning into two years of credit card debt. Here is how big it needs to be and where to keep it.

Send us a message Message on WhatsApp

The short answer

Start with £500, then build towards three months of core costs. Six months if you are self-employed. Keep it in an easy access account with a different bank from your current account, within the FSCS limit of £120,000 per person per banking group.

£500A realistic first target

3 monthsOf core costs, employed

6 monthsIf you are self-employed

£120,000FSCS protection per banking group

What is on this page

What an emergency fund is actually for
How much you need
Where to keep it
The difference between a buffer and a sinking fund
Building it when money is tight
Emergency fund or pay off debt?
Where insurance takes over

What an emergency fund is actually for

An emergency fund exists to stop a normal problem becoming a debt problem. A boiler, a car, a vet bill, a month of statutory sick pay.

Without one, those events go on a credit card and stay there. That is the whole mechanism by which manageable finances become unmanageable ones.

It is not an investment. It is insurance you provide yourself, and it should be boring on purpose.

How much you need

Your situation	Target	Why
Starting from nothing	£500	Covers most single unexpected bills
Employed, stable, no dependants	3 months of core costs	Enough to absorb a gap between jobs
Employed with a family	3 to 6 months	More fixed costs, less flexibility
Self-employed	6 months	No sick pay, no redundancy pay, income moves
Retired on fixed income	1 year of variable costs	Less able to earn your way out of a problem

Base the calculation on core costs, not total spending. That is the figure you would actually live on.

A household spending £3,200 a month total might have core costs of £2,100. Three months is £6,300, not £9,600. Using the smaller number makes the target reachable.

Where to keep it

An easy access savings account, separate from your current account
With a different bank if you tend to dip into what you can see
Paying the best easy access rate you can find, though the rate is not the point
Within the FSCS limit of £120,000 per person per banking group
Not in premium bonds if you need certainty, and not in investments at all
Not in a fixed-term account you cannot break

The test is simple. Could you have the money in your current account within 24 hours, without a penalty? If not, it is savings, not an emergency fund.

The difference between a buffer and a sinking fund

An emergency fund is for things you did not see coming. A sinking fund is for things you did.

Emergency fund

Unpredictable

Boiler failure, car repair, redundancy, a period of illness. Untouched until one of those happens.

Sinking fund

Predictable but irregular

Christmas, car insurance, the MOT, a school trip, the annual holiday. Known costs that arrive in lumps.

Most people who say they cannot keep an emergency fund are actually using it as a sinking fund. Separating the two fixes it more often than earning more does.

A couple going through their finances together at home

Worked out three months of costs and it looks impossible?

That is usually a sign the household needs cover rather than more saving. We can look at that side directly.

Ask us a question

Prefer WhatsApp? Message us there. We are open Monday to Saturday, 9am to 8pm.

We advise on and arrange life cover, critical illness cover and income protection ourselves. There is no fee to you for our advice. If you take out a policy, the insurer may pay us a commission.

Building it when money is tight

Set a small first target

£500, not three months. A reachable number gets reached.

Automate it the day you are paid

A standing order the morning after payday beats intention every time.

Send windfalls straight in

Tax refunds, bonuses, birthday money. Nobody misses money they never saw.

Use one bill saving

Cancel or renegotiate one thing and redirect exactly that amount.

Leave it alone

The account should be dull, separate and out of the banking app you check daily.

Emergency fund or pay off debt?

Both matter, and the order depends on the interest rate and how exposed you are.

Get to £500 firstEven with expensive debt. Without a small buffer, the next problem goes on the card and undoes the progress.

Then clear anything above about 20%Store cards, payday loans and overdrafts cost far more than any savings account pays. Clear them next.

Then build to three monthsOnce the expensive debt is gone, the buffer is the thing that keeps it gone.

Keep the buffer even while overpaying a mortgageMortgage overpayments cannot usually be taken back out. A buffer can.

Where insurance takes over

An emergency fund handles weeks. It does not handle a year off work with a serious illness, and it never handles a death.

Statutory sick pay is a small fraction of most salaries and runs for a limited period. If your household could not survive six months of that, savings are not the tool for the job.

Income protection replaces part of your income while you cannot work. It is one of the things we advise on and arrange ourselves.

A child putting a coin into a piggy bank

Who this suits, and who it does not

Prioritise this if

You have no savings at all
Any unexpected bill would go on a credit card
You are self-employed with no sick pay
Your job or hours are not guaranteed

Deal with something else first if

You have arrears on rent, council tax or energy
You are paying over 30% interest on anything
You are missing an employer pension match
Bailiffs have already contacted you

Check broadband before you make an offer

Broadband speeds can vary street by street, so check the exact address before you commit. Ofcom's free checker shows which broadband speeds and mobile coverage are available at any UK property.

Check broadband at an address (Ofcom)

Want all your bills in one?

We can introduce you to a specialist who can combine your mobile, broadband and utilities into one bill. There's no fee for the introduction.

WhatsApp us Contact us

We don't provide these services ourselves. Switching household bills is not a regulated financial service, so FCA protections and the Financial Ombudsman do not apply. We'll only pass your details to the specialist if you ask us to. See our privacy notice.

Questions people actually ask

How much should I have in an emergency fund?

Start with £500, then build to three months of core costs. Six months if you are self-employed or your income is irregular.

Where should I keep my emergency fund?

In an easy access savings account, ideally with a different bank from your current account. Keep it within the FSCS limit of £120,000 per person per banking group.

Should I invest my emergency fund?

No. Money you might need next month should not be able to fall in value. Investments are for money you will not need for at least five years.

Emergency fund or pay off debt first?

Build £500 first, then clear debt above about 20% interest, then build the fund to three months. Without a small buffer the next emergency rebuilds the debt.

What counts as an emergency?

Something unexpected and necessary. A boiler, a car repair you need to get to work, a gap in income. Christmas and the annual car insurance are not emergencies, they are predictable.

How long should it take to build?

There is no correct speed. £50 a month reaches £500 in ten months. Consistency matters more than the amount.

Should I keep it in premium bonds?

You can access the money, but returns are a prize draw rather than interest. If you want certainty about what will be there, an easy access account is the simpler answer.

Is an emergency fund still needed if I have income protection?

Yes. Income protection has a waiting period before it pays, often four to twelve weeks. The emergency fund covers that gap.

How do I check broadband speed at a property?

Use Ofcom's free broadband and mobile checker at checker.ofcom.org.uk. Enter the property's postcode and choose the address to see which broadband speeds and mobile coverage are available before you make an offer.

Where to go next

Where these figures come from

Figures checked on 1 September 2026 and correct for the 2026/27 tax year. Rates change, so check the source before you act on a number.

We do not give regulated debt advice and we are not paid to refer you anywhere for it. The charities named on this page are free.

Last reviewed September 2026.

Savings cover weeks. Cover handles the rest.

If six months without your income would break the household, that is something we can advise on and arrange ourselves.

Start a conversation

Prefer WhatsApp? Message us there. We are open Monday to Saturday, 9am to 8pm.

We advise on and arrange life cover, critical illness cover and income protection ourselves. There is no fee to you for our advice. If you take out a policy, the insurer may pay us a commission.