Emergency Fund

patch9495

Morning All,


I am after some advice regarding calculating an emergency fund.


I have read through the various forums on here advising 6 months or so of emergency fund build up.
I would like to invest more into my S&S isa and am currently reassessing my current finances.


As current I have 4 months emergency fund in an easy access savings account accounting for mortgage food and bills, however have an additional 6 months saved in Regular savers.


Would it be wise to include 2 months worth of money in regular savers in my emergency fund pot, as it can be "easily accessed" forgoing the interest however with interest rates so low we aren't talking a huge amount (£80 or so)


I would then look to reinvest the further 2 months of money in my regular savers into a S&S ISA and run an emergency fund and S&S ISA side by side


Thanks for the advice

NoMore

It's just advice, it's not the law that as a minimum you must have 6 months emergency funds available. Most advice seems to say between 3 and 6 months.

Having any emergency fund at all probably puts you ahead of the majority of the population.

Do whatever you feel comfortable with.

Neil_Jones

In an ideal world we'd all have access to a massive pot of money that never runs out. In reality, we have to do what we can with what we have.

So... If you're happy for it to consist of regular savers and an ISA, do it. As above if you have spare cash and you're not living payday to payday as it is, you're doing well than most.

DCFC79

Whatever you have spare each month put it away.

Prism

It comes down to other factors and what emergencies you are looking to protect against. A broken boiler is very different than a long term illness. I work for myself and therefore to protect against illness or injury I have about a years worth of salary reserved.

Anonymous101

This is a blog post from a US based site but it offers another perspective on emergency funds.

https://www.google.co.uk/amp/s/earlyretirementnow.com/2016/05/05/emergency-fund/amp/

Personally I stagger regular saved accounts and once they mature drop the lump sums into my S&S ISA where the majority of my investments are held. I don’t see the need for any more than 1-3 months expenses held in cash. Pretty much for the reasons put forward in the article I suggested.

I will say that emergency funds seem very personal. I like to be quite aggressive with my investment strategy but I can also be flexible with my spending so am able to keep a minimal emergency fund. Others are not as comfortable and require higher amounts. No hard and fast rules. Just up to how you feel.

Terry_Towelling

You don't actually have to have a fund set aside in a special account for emergency living expenses - although that is as good an idea as any. All you really need to ensure is that your savings/investments allow easy access to whatever sum you choose to call your emergency living expenses fund.

I don't have an account for emergencies of any sort; I just know that there is enough floating around and easily accessible in case it's needed.

As Prism advises, there is also a difference between an emergency fund for 'living' (in the event you lose your job or become sick) and an emergency fund for unusual expenses that might crop up (like a broken boiler).

You just need to try and keep your cash getting you the best return you can whilst also ensuring that enough of it is easily accessible in case you need it - whether that be for living for 6 months or covering an unusual expense.