Advice on emergency fund

lonestarfan

I'm planning to get debt free and am not far off. I then want to be careful what debt I ever take on so am planning on regular saving and emergency funds. I live in my house on mortage and would like advice on how much is an appropriate emergency fund. Years ago I was told £3000. I could have a few emergencies in the next few years eg my boiler is 10 years old, my car is ageing, my mum is elderly etc. I also need to get regular savings for a 5 year plan to upgrade boiler and windows but for the meantime need an emergency fund. What amount do you tend to have as an emergency fund? Thanks.

thatwilldo

Hi

You will always get the advice of having 3 to 6 months of salary that can be accessed easily in the event of losing a job or a significant life event. Having read your post it seems you want to keep a few thousands aside for domestic emergencies rather than life events. For me have enough to cover a couple of things going wrong and be careful not to dip into the money when you are short. £3k would seem a sensible amount.

Thanks

Pixie5740

I have a £1000 emergency fund. Other things like new car tyres or a replacement washing machine are things I see as being inevitable rather than an emergency so I budget money for them separately.

lonestarfan

I like that advice of separating life events and domestic emergencies as hadn't thought of it like that. I'm going to aim also then for 3-6 months salary too. Thnx.

katy_ann

At the moment I don't have an emergency fund but when I get a mortgage I'd like to have around £3000

andyfromotley

Echoing what Pixie said.

New boiler and new car etc aren't emergencies. Anything that can be foreseen should be budgeted for. Even car repairs which of course involves a bit of guesswork, but having a car repair fund of £20 is not being realistic. (neither is having one of £4k!!) Other things that aren't emergencies (but i treated them financially as such!!) Holidays, school trips, Christmas etc etc.

Ynab definitely helps you deal with this.

Once you have all of that taken care of i think 1k sounds reasonable. If you are in a job where you could be made redundant the old advice of three to six months wages would seem to be something to aspire to.

dancingfairy

3-6 months would give you a good safety cushion, but obviously anything is better than nothing, even 1 month, or less would give you some options.
I've heard that 1 year is a good amount, as it means that even if you lost your job and couldn't find one for a while or became ill and had to take time off work you'd probably be o.k, but this is probably a long term aim.
df

lonestarfan

Some good ideas there thank you. I've been working on a budget that includes money for foreseeable replacements eg washing machine, boiler etc so shall adjust that. I do budget already for car repairs and car services etc. I think I will aim for 6 months salary as well. Time to start saving! Thank you.

carol1963_2

I'd love to have an emergency fund but I'm still finding it very hard to have anything left and still struggle through the last week before pay day! I'm not sure if Stepchange will allow me to reduce my monthly payments to allow me to put some (even a little aside).

Meatloaf1981

Typically Stepchange and other charities advise you to put away a sum every month for an emergency fund which is NOT unreasonable given you can no longer access most reasonable lines of credit. If you don't have one factored into your repayment schedule, I would seek to build it in otherwise you may be setting yourself up for a fall in future.