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  • FIRST POST
    • Rofo87
    • By Rofo87 6th Dec 17, 5:28 PM
    • 3Posts
    • 2Thanks
    Rofo87
    Emergency Fund
    • #1
    • 6th Dec 17, 5:28 PM
    Emergency Fund 6th Dec 17 at 5:28 PM
    Hi all,

    I'm looking at getting a bit more financially stable by having an emergency fund because currently I have nothing except for a Credit Card for a back-up strategy. I'm aiming for 3-6 months worth of bills eventually but to start with need to get 1 month of bills in a savings account.

    My question is, do you have an emergency fund in a savings account that is easily accessible or do you have a separate account for it? Also how long do you expect to have an emergency fund built up, in a perfect world where nothing ever breaks down. (I know that last part is variable depending on income and what you can afford to put away)

    Thanks
Page 1
    • xylophone
    • By xylophone 6th Dec 17, 6:35 PM
    • 23,633 Posts
    • 13,761 Thanks
    xylophone
    • #2
    • 6th Dec 17, 6:35 PM
    • #2
    • 6th Dec 17, 6:35 PM
    Aim at six months' salary.

    Use an interest paying current account - there are several available.
    • MP2609
    • By MP2609 6th Dec 17, 6:36 PM
    • 5 Posts
    • 24 Thanks
    MP2609
    • #3
    • 6th Dec 17, 6:36 PM
    • #3
    • 6th Dec 17, 6:36 PM
    Hi Rofo

    I currently have about 1-2 months in the easy access account with the bank I have my main bank account with. I myself am trying to increase my emergency fund while saving for a house deposit at the same time so its all about getting the balance right.

    I am not really concerned about the interest rate on the account as I just prefer to have quicker access to account linked to my main current account.

    I reckon into will be another 1-2 months before i have it fully built up, but obviously it depends on everyones commitments.
    • Novice investor101
    • By Novice investor101 6th Dec 17, 7:06 PM
    • 63 Posts
    • 24 Thanks
    Novice investor101
    • #4
    • 6th Dec 17, 7:06 PM
    • #4
    • 6th Dec 17, 7:06 PM
    I have £500 in a bog standard, rubbish interest paying savings account that I can access immediately by transferring it to my current account through mobile banking (that's my little problems fund ie new washer etc). Then I have 6 months salary in a defined access ISA at another bank (that's my total disaster fund)& a regular saver which gets topped up monthly for my "nice to have" fund (like holidays etc). & A stocks & shares ISA on a monthly savings plan which is my early retirement fund. & My current account for bills & monthly spends. Also have another current account that I pay £125 a month into for yearly bills like car insurance & TV licence.
    Piggybacking really does work!
    • Dobbibill
    • By Dobbibill 6th Dec 17, 7:06 PM
    • 2,537 Posts
    • 3,631 Thanks
    Dobbibill
    • #5
    • 6th Dec 17, 7:06 PM
    • #5
    • 6th Dec 17, 7:06 PM
    Hi Rofo,

    Welcome to the forum.

    Hi all,

    My question is, do you have an emergency fund in a savings account that is easily accessible or do you have a separate account for it?
    Originally posted by Rofo87
    This is very much a case of 'horses for courses' and will vary for many posters.

    For me the answer is both - it's in a separate account but also easily accesable.

    Also how long do you expect to have an emergency fund built up, in a perfect world where nothing ever breaks down. (I know that last part is variable depending on income and what you can afford to put away)
    Personally it's an ongoing thing. Save it, leave it, only use in emergency, top up if/when required.

    If you have other funds running alongside the EF then the need to use it should be lessened.
    ie -
    *3-6 EF used if income reduced due to job loss or similar.
    *House savings - funded monthly, used if something is in need of repair/refurbish
    *Basic EF (£1000) used if white goods etc breaks down unexpectedly and cannot be replaced via the House savings above.

    I'm sure others will be along shortly with differing views - it's personal preference. Find what works for you
    I'm a Board Guide on the Energy, Student Money Saving, UK Armed Forces and
    Local Money Saving - Wales boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.


    A person who never made a mistake, never tried anything new.
    • Novice investor101
    • By Novice investor101 6th Dec 17, 7:07 PM
    • 63 Posts
    • 24 Thanks
    Novice investor101
    • #6
    • 6th Dec 17, 7:07 PM
    • #6
    • 6th Dec 17, 7:07 PM
    That should say piggybanking...
    • Anthorn
    • By Anthorn 6th Dec 17, 9:42 PM
    • 3,263 Posts
    • 838 Thanks
    Anthorn
    • #7
    • 6th Dec 17, 9:42 PM
    • #7
    • 6th Dec 17, 9:42 PM
    Hi all,

    I'm looking at getting a bit more financially stable by having an emergency fund because currently I have nothing except for a Credit Card for a back-up strategy. I'm aiming for 3-6 months worth of bills eventually but to start with need to get 1 month of bills in a savings account.

    My question is, do you have an emergency fund in a savings account that is easily accessible or do you have a separate account for it? Also how long do you expect to have an emergency fund built up, in a perfect world where nothing ever breaks down. (I know that last part is variable depending on income and what you can afford to put away)

    Thanks
    Originally posted by Rofo87
    Looking back to 2008 the banks went down, my employer's bank went down, my employer went down and I lost my job. I had nothing liquid to fall back on so I went down and I became a financial untouchable.

    One of my priorities when rebuilding my credit history was an emergency fund and I started building that as soon as I could. In short, it makes sense to have one.

    Cut to the present: A multiple of salary doesn't work for me. I calculate my total monthly outgoings and multiply that by 6 which means that I can carry on for 6 months if the worst happens again.

    Lastly, it doesn't work for me to have to wait for access to an emergency fund. If there's an emergency I need it immediately. So I keep it in an instant access savings account. Not much interest but there you go: It's not primarily an account for saving but an emergency fund.
    • TheShape
    • By TheShape 6th Dec 17, 10:03 PM
    • 1,141 Posts
    • 906 Thanks
    TheShape
    • #8
    • 6th Dec 17, 10:03 PM
    • #8
    • 6th Dec 17, 10:03 PM
    Aim at six months' salary.

    Use an interest paying current account - there are several available.
    Originally posted by xylophone
    This is a good place to start. If you had, for example, a Club Lloyds* current account as your main current account you could fill it to £5000 @ 2% and it could operate as both a current account and an emergency fund. You could also add Club Lloyds monthly saver and monthly saver accounts @ 3% and 2.5% respectively to extend your emergency fund/savings fund.

    *Other interest paying current accounts at better rates are available.
    • badger09
    • By badger09 7th Dec 17, 9:45 AM
    • 5,567 Posts
    • 4,876 Thanks
    badger09
    • #9
    • 7th Dec 17, 9:45 AM
    • #9
    • 7th Dec 17, 9:45 AM
    I'm in the fortunate position of no longer needing an emergency fund. (And before anyone asks, no, I'm not bragging)

    However, if I did, I would agree with Anthorn rather than with xylophone.

    Aim for 6 month's (necessary rather than discretionary) expenditure rather than 6 month's salary. Sadly, for many, those two figures are very close together.
    I'm a supporter of dunstonh
    • enthusiasticsaver
    • By enthusiasticsaver 7th Dec 17, 9:57 AM
    • 4,826 Posts
    • 9,111 Thanks
    enthusiasticsaver
    Interest paying current account for us. In a few weeks time though I am retiring early and DH already early retired so we will both be in receipt of DB pensions. The emergency fund will therefore become our drawdown fund to supplement pensions/investment income until other pensions and state pensions pay out.
    2 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • enthusiasticsaver
    • By enthusiasticsaver 7th Dec 17, 10:05 AM
    • 4,826 Posts
    • 9,111 Thanks
    enthusiasticsaver
    Before deciding on a blanket amount for an emergency fund it will be different for everyone depending on circumstances.

    If you are self employed or working for a small private company with perhaps low sick pay I would aim for 6 months salary. If you work for a large organisation with good sick pay or the public sector then 3 months should be sufficient.

    If you run a car or own a house then having a few thousand for essential repairs is sufficient and maybe a deposit on new car. If you don't have a car and rent then having enough cash to pay a deposit on a new rental is a good idea.

    Finally if you have debt then I would prioritise this over building a large emergency fund unless all the debt is on 0%.
    2 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Rofo87
    • By Rofo87 7th Dec 17, 4:31 PM
    • 3 Posts
    • 2 Thanks
    Rofo87
    Thank you all for your responses so far. I've been looking around at some savers but I need to have a proper sit down and look through what is best for us.

    I would definitely be aiming for required amount for all bills and not full income based. We have a few debts that need to disappear quicker than they are but thankfully they are all 0% interest. I've already made a full SOA, we just need to analyze what our variable expenditure is, i.e. food, fuel etc. I've managed to cut some bills by ~£120 a month, this will more than likely be going in to the EF.

    Lastly, it doesn't work for me to have to wait for access to an emergency fund. If there's an emergency I need it immediately. So I keep it in an instant access savings account. Not much interest but there you go: It's not primarily an account for saving but an emergency fund.
    This makes total sense and I'll most likely be going for this approach.

    Thank you all
    • takman
    • By takman 7th Dec 17, 4:39 PM
    • 2,884 Posts
    • 2,402 Thanks
    takman
    This makes total sense and I'll most likely be going for this approach.
    Originally posted by Rofo87
    Just to let you know that if you do decide to keep it in another current account to get a higher rate of interest then a transfer to another account is always almost immediate, if not maybe a few mins. So no real reason to keep it in a poor paying account just because it's with the same bank.

    Also it's a good idea to keep it in another bank because if your banks systems stop working then you always have a backup.
    • badger09
    • By badger09 7th Dec 17, 5:05 PM
    • 5,567 Posts
    • 4,876 Thanks
    badger09
    Thank you all for your responses so far. I've been looking around at some savers but I need to have a proper sit down and look through what is best for us.

    I would definitely be aiming for required amount for all bills and not full income based. We have a few debts that need to disappear quicker than they are but thankfully they are all 0% interest. I've already made a full SOA, we just need to analyze what our variable expenditure is, i.e. food, fuel etc. I've managed to cut some bills by ~£120 a month, this will more than likely be going in to the EF.



    This makes total sense and I'll most likely be going for this approach.

    Thank you all
    Originally posted by Rofo87
    Where do you bank at the moment?

    It makes sense to have at least 2 current accounts with different banks, so you're not stuck if one bank's systems go down or your card is declined for whatever reason.

    You could look at maximising cashback/rewards on your bills and day to day spending as well as maximising interest on your emergency fund.

    Have you read this?

    https://www.moneysavingexpert.com/banking/compare-best-bank-accounts

    You might even pick up a switching bonus on the way
    I'm a supporter of dunstonh
    • datlex
    • By datlex 7th Dec 17, 6:21 PM
    • 1,449 Posts
    • 1,235 Thanks
    datlex
    Hi all,

    I'm looking at getting a bit more financially stable by having an emergency fund because currently I have nothing except for a Credit Card for a back-up strategy. I'm aiming for 3-6 months worth of bills eventually but to start with need to get 1 month of bills in a savings account.

    My question is, do you have an emergency fund in a savings account that is easily accessible or do you have a separate account for it? Also how long do you expect to have an emergency fund built up, in a perfect world where nothing ever breaks down. (I know that last part is variable depending on income and what you can afford to put away)

    Thanks
    Originally posted by Rofo87
    There are threads in debt free challenges both £1000 emergency fund http://forums.moneysavingexpert.com/showthread.php?t=5076051 and a 3 to 6 months emergency fund challenge http://forums.moneysavingexpert.com/showthread.php?t=5344441
    • kaych
    • By kaych 7th Dec 17, 9:58 PM
    • 333 Posts
    • 187 Thanks
    kaych
    Use a regular saving account that allow easy access could be a start.

    Depends on who you bank with, I know that lloyds and tsb have regular saver that allow instant access with 3% and 2% interest, respectively. so you can save between £25 - £400 a month. You can also take the money out as and when you need it.

    This way, you will be less tempted to take the money out as it’s being saved separately, unless you need them. And after 12 months, if you haven’t used any of the money, you will also get a nice little pot of saving.
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