Emergency Fund
What is an emergency fund?
An emergency fund is savings you keep for the unexpected. Job loss, car repairs, boiler breakdown, medical costs. Things you can’t predict but need to pay for.
How much should you have?
The common advice is 3 to 6 months of essential expenses. Not income. Expenses. Add up rent or mortgage, bills, food, transport, and any debt payments. That’s your target.
Some people aim for less (one month) when starting out. Some aim for more (12 months) if their income is unpredictable or they’re self-employed.
Where should you keep it?
An easy access savings account. You need to be able to withdraw immediately when something goes wrong. Don’t lock it in a fixed rate account or invest it. You might need it tomorrow.
An easy access Cash ISA works too if you want the interest tax-free.
If you have a large emergency fund (over £85,000), consider spreading it across multiple banks. The FSCS (Financial Services Compensation Scheme) only protects £85,000 per banking group.
Should you build this before investing?
Yes. Without an emergency fund, you might be forced to sell investments at a loss or take on debt when something unexpected happens. Build the fund first, then invest what’s left over.
Scrimpr’s FSCS checker shows which banks share protection limits. Some brands that look separate are covered under the same £85,000 cap.
Check FSCS Protection →Key points about emergency funds
- 3 to 6 months of essential expenses. Adjust based on your situation
- Keep it in easy access savings. You need to reach it fast
- Build this before investing. It protects you from having to sell at the wrong time
More information
Scrimpr links to official sources so you can verify what you’ve learned.