How much money do you keep as rainy day fund?

michaels

I also have the flexible mortgage but am not sure whether they might ask you for proof of income if you made a big overpayment and then started to draw down regularly? Also it is too late once made reduandant to use savings to pay the mortgage as that is considered deliberate 'deprivation of capital'. All ISAs are counted as 'capital' leaving the difficult decison of keeping the tax wrapper and forgoing benefits or cashing in all the ISAs prior to redundancy and paying off the mortgage...not that I have been looking in to this in detail of late

borntobefree

At least monthly income * 6 - often more.

LilacPixie

Not alot. About 2 months net salary in cash savings.

I have been concentrating on paying down mortgage with the thought that it is unlikely that both of us would lose our jobs, we can survive on one wage with a bit of sacrifice.

RenovationMan

LilacPixie wrote: »

Not alot. About 2 months net salary in cash savings.

I have been concentrating on paying down mortgage with the thought that it is unlikely that both of us would lose our jobs, we can survive on one wage with a bit of sacrifice.

Plus insurance such as income protection, life assurance, boiler cover, building & contents are all available to ease the pain.

housesitter

FTB, 25% deposit saved. About to purchase in next month or two (here's hoping).
Additional 10% spare after purchase for potential unemployment.
Further 10% in ISA's for long term savings.
Expect to be able to pay mortgage whilst being unemployed for 12 months without touching ISA's.
However I would never sit on my !!!! doing nothing so would always have some form of wage coming in, right from the day I was officially unemployed (been there, done that).

I'm adverse to risk where money is concerned and circumstances have led me to not yet having bought a house hence the rather high deposit potential.
I could go for 40% mortgage but it would be financially irresponsible to not have a backup plan.

marklv

movilogo wrote: »

That is money to be used in emergency i.e. either avialable as liquid cash or can be taken out from any savings a/c without paying penalty.

Is it like:

Your monthly income * 6
Your average monthly income * 12
A fixed amount like £10,000
Your monthly expense * 12
Your mortgage payment * 12

etc.

I tend to keep our monthly expense * 6
i.e. 6 months normal expense from savings

Not sure if that is high or low.

I have £30k stashed away, but I do lead a spartan lifestyle and don't own a car. I would probably reduce this to £20k in the near future as I wish to buy a (decent) car once I have passed my driving test. I also have income protection insurance that pays £1,000 a month for a maximum of 12 months.

I think an emergency fund of £15-20k should be enough for most people. Bear in mind that if you were to lose your job you would need to adjust your lifestyle and not carry on as if nothing had happened. Personally, I think you should ensure your fund would cover all bills for 6 months, plus an extra £600 a month minimum for those 6 months. If you have income protection insurance you may choose to avoid the latter.

Idiophreak

marklv wrote: »

I have £30k stashed away, but I do lead a spartan lifestyle and don't own a car. I would probably reduce this to £20k in the near future as I wish to buy a (decent) car once I havce passed my driving test.

I think an emergency fund of £15-20k should be enough for most people. Bear in mind that if you were to lose your job you would need to adjust your lifestyle and not carry on as if nothing had happened. Personally, I think you should ensure your fund would cover all bills for 6 months, plus an extra £600 a month minimum.

If you spend £600/month on top of your bills, your definition of "spartan" must be different to mine

marklv

maveli wrote: »

6K. anything over that you will be punished by uk benifit system

I would suggest that it's highly dangerous to rely on the benefits system. For how long could you live on £65 a week?

marklv

Swipe wrote: »

At the moment I have around 3 years net salary which I could easily live on for about 8 years (no mortgage). If I lost my job and got myself a 3 day / week part time one stacking shelves I could make it to retirement.

This is way OTT. Not a good idea to keep such a large amount of cash in bank accounts. It would be better to invest it in a pension scheme or to pay more of your mortgage.

marklv

Raggs wrote: »

As a non means tested retirement fund then a house is a good one, but I don't think I'm going to want to move when I'm 70 (or whenever the retirement age is when I get there).

I think collectibles (geniune ones, not fads like beany babies) could be a useful one as well, individually sellable, but pleasant to look at in the meantime.

I'm going to try and go for investing in my house, but in terms of solar/wind power, energy efficiency, own chickens, own beehive, vegetable patch etc etc, basically not need that much cash.

Collectibles are an excellent idea for storing value. Just go on eBay and see how much limited edition Montblanc pens are selling for!