Reserve and emergency fund - what do you do?

stphnstevey

Interested in how people handle this, as specific to own circumstances, general idea of frequency of income, bills and level of contingency and methods used would help

Personally have 2 scenarios:

1) Mainly annual income,
50% of bills are regular monthly bills,
50% of bills are larger lump sum bills approx quarterly.
25% of income covers bills.
Currently reserve 50% of income, split 50:50 instant access P2P and high interest maybe 90d access to P2P

2) Monthly income but variable
No monthly bills
25% of bills are small lump sum bills approx quarterly
75 % of bills are large lump sum bills approx annually
25% of income covers bills
Current reserve 100% of income, 100% instant access P2P


It seems obvious now put like this that 2 needs to reduce reserve, maybe to 59% of income?
Any other changes, suggestions, what you would do?

justme111

I do not understand neither the scenarios you describe nor your question I am afraid. I have responded so that other people who read your post and scratch their heads " what is it about" know it is not only them who do not understand it.
Other than that - you mean all your emergency money is un p2p?

redux

Why worry about formally calling something reserve or emergency fund?

Use bank accounts that pay some interest, perhaps their associated monthly saver accounts as well, and when some money is needed withdraw it. If the aggregate total gradually increases, think about investing some as well, perhaps monthly. If it gradually decreases, do something about spending habits.

stphnstevey

justme111 wrote: »

I do not understand neither the scenarios you describe nor your question I am afraid. I have responded so that other people who read your post and scratch their heads " what is it about" know it is not only them who do not understand it.
Other than that - you mean all your emergency money is un p2p?

Ok, lose the word "emergency"!

Money that is needed for general monthly living expenses and future taxes up to a year

1 is me!

2 is the limited company I work through, but own

Anyone use anything other than bank accounts for this type of money?

LobsterMemory

So money for known amounts (give or take) due in the short term

Seems exactly what easy access savings accounts are for.

(Talking about scenario 1)

masonic

P2P accounts are not savings accounts
P2P accounts are not savings accounts
P2P accounts are not savings accounts
P2P accounts are not savings accounts
...

enthusiasticsaver

I am not sure you could call P2P instant access savings?

Any emergency or reserve money should be kept in something reasonably accessible. Personally we use high interest current accounts and internet savers. I know some who use premium bonds or national savings. I certainly would not put emergency or reserve money in P2P. It is a relatively risky way of keeping savings and you are not guaranteed being able to withdraw it when you need it.

Apodemus

I would consider that my immediate-access emergency needs would be met by my credit cards, giving me a one-month window to access cash from slightly less liquid savings.

My routine payments are met from a dedicated “bills” account which at the moment is split roughly 20/80 between a current account and premium bonds. I keep a track of the annual needs for each bill category and transfer 1/12 of that to the bills account on the first of every month. Over the years the amount in this account has grown and currently represents about ten months of forward bills expenditure.

Zero_Sum

enthusiasticsaver wrote: »

I am not sure you could call P2P instant access savings?

Any emergency or reserve money should be kept in something reasonably accessible. Personally we use high interest current accounts and internet savers. I know some who use premium bonds or national savings. I certainly would not put emergency or reserve money in P2P. It is a relatively risky way of keeping savings and you are not guaranteed being able to withdraw it when you need it.

There are some that have an easy access option loke ratesetter & assetz capital, ie you dont have to sell loans. Rates are lower than those tied to loans but still a lot better than savings accounts.

I have a bit invested in P2P, but they're for longer term things where im not needing the cash.Personally i probably wouldnt use P2P either for emergency funds either.

fabsaver

There is no such thing as instant access P2P.

The account may be instant access today, but will it still be instant access when you need it in an emergency? The accounts marketed as such usually have some terms in the small print about 'normal market conditions' or similar. If there is a run on P2P or some negative news about a particular platform you may well find that your money is not as accessible as you thought it was.

If the platform were to fail the administration process could take years before any of that money may be returned to you, assuming the administrators haven't used it all to pay their fees.

I do invest in P2P but keep emergency funds in a mixture of high interest current accounts, regular saver accounts and NS&I.

Zero_Sum

fabsaver wrote: »

There is no such thing as instant access P2P.

The account may be instant access today, but will it still be instant access when you need it in an emergency? The accounts marketed as such usually have some terms in the small print about 'normal market conditions' or similar. If there is a run on P2P or some negative news about a particular platform you may well find that your money is not as accessible as you thought it was.

If the platform were to fail the administration process could take years before any of that money may be returned to you, assuming the administrators haven't used it all to pay their fees.

I do invest in P2P but keep emergency funds in a mixture of high interest current accounts, regular saver accounts and NS&I.

If a bank failed, how long would it take to get money back?
So arguabley no banks other than NS&I are truely instant access