How much should be my Emergency fund?

Broken_hearted

Mine would have to be around £4,000 to cover 6 months of everything.

the_cat

Depends what you mean by an emergency I guess....I have a few hundred quid put aside for when the washing machine blows up, the car breaks down or similar

Over and above that, I think you are best bashing down the debts until they are all gone. Then (in that mythical ideal world!) you can start getting together a bigger buffer of savings. Depends on circumstances as to whether your job is high risk, you are self employed, etc etc etc but I would aim for about 6 months expenditure

mcbean2011

3 months wages,

Nottoobadyet

Totally depends on circumstances. I'm young, in stable employment on the money-making side of an organisation (very unlikely to be cut), living in rented accommodation, childless and petless and don’t own a car, so there’s not much that could go wrong! So when I was paying down debt, I felt little need to have a big emergency fund.

Now that Im in a better financial position, I'll still try to keep about 3 months of expenses in liquid savings that I can access easily in case something goes pear shaped - unemployment, illness, overseas family crisis, etc.

mrsb83_2

the_cat wrote: »

Depends what you mean by an emergency I guess....I have a few hundred quid put aside for when the washing machine blows up, the car breaks down or similar

Over and above that, I think you are best bashing down the debts until they are all gone. Then (in that mythical ideal world!) you can start getting together a bigger buffer of savings. Depends on circumstances as to whether your job is high risk, you are self employed, etc etc etc but I would aim for about 6 months expenditure

Totally agree. I put aside small amounts each month for car and home maintenance expenses which covers garage bills and appliances breaking down. There's never usally more than £500 in those pots. It's there to be spent, though, so I don't feel bad if I need to use it. The rest goes to debt.

I would like 4 months' wages in savings once we become debt-free.

gettingbackontrack

I'm just now getting into the position and have wondering the same thing. I'm thinking - enough to repair the boiler, or fix the car. It is tempting to throw the money at the debts but if you have no way of getting money for an emergency, it just feels very risky. I'd love to have 6 months' wages but that's about half my debt and if I HAD that much I'd definitely be reducing those balances even more. I admire people who do though!

RAS

Hi

There seems to be a lot of confusion between a budgetting account and savings here.

Even if you are in a lot of debt, you need to make proper provision for the maintenance of your household and any emergency; so workling out how much you spent to maintain the car last year, on repairing white goods, on plumbers and electricians is part of devising a proper budget. Then divide that figure by 12 and put that much into a "savings account" even though it is not savings. Not doing that may be one of the reasons you got into debt in the first place.

If you have enough to pay your household costs and your minimum payments, then accruing an emergency fund of three to 6 months' salary starts to make sense, as long as you are not paying out 20-30 percent on the debts.

gettingbackontrack

RAS, that's great advice and I wish I'd heard it four years ago. I WAS using the cards for those expenses that should have been budgeted for and when the cards were maxed out, I had nowhere to turn.

I think it's changing the mindset about "saving" - if I'm putting money away to cover those necessary expenses like MOT, home repairs, I shouldn't see it as a luxury but an important part of taking control of my finances.

tbourner

RAS wrote: »

Hi

There seems to be a lot of confusion between a budgetting account and savings here.

Seems so, hence my original question.

Odette

Like Nottoobadyet said; Im young, with a stable job, no kids, renting, no pets. No real assets and I am DF. I keep £2k spare just incase, which is about 1.4 of my monthly salary. Im not to worried about adding to it as it would cover us a) having to move at short notice b) the car packing up completely without too much trouble.