How do you structure your emergency fund?

themanfromamarillo

So my OH and I are starting to join our finances together after a few years of spreadsheets and working out who paid what bill. At some point in the next few years we might look towards buying a house. As a result I've been thinking about how much we should leave as an emergency fund and how we should structure it. We live in Germany so savings rates are rubbish and high interest current accounts don't seem to be a thing. The only way I can think of to get a reasonable return would be to have about 6 months expenses in an easy access savings account and then another 12 months split between two fixed one year rate bonds with renewal dates six month apart.

How much to other posters keep in an emergency fund and how do they structure it?

masonic

I have a couple of months living expenses in current accounts and 24 x 1 months living expenses in 2 year fixed rate accounts with renewal dates 1 month apart. Though some of that is in lieu of investing in bonds in my S&S ISA.

LobsterMemory

4 months salary all in easy access

I think it's necessary to define when you will use the fund

Me - any unbudgeted-for expense

So this last couple of months I've accessed it for

£600 for all the expenses I had to attend a funeral
£60 extra the Building Mgmt company charged for lighting repairs as part of my leasehold

I'm sure many, including myself, could have absorbed that £60 but I prefer to take it out of the money I've set aside for exactly that purpose

Now, if you're keeping the emergency fund for much more "known" emergencies then I can understand putting the money into more longer term vehicles.

I think I'd have it in a rolling or fixed 3-months notice account rather than 2 years though

LobsterMemory

I missed that masonic had a rolling 1 month ladder

Looks a pretty good idea

chockydavid1983

Emergency fund is all in easy access.
Currently hold a bit more than usual as I'm thinking about what non ISA investments to buy.

tacpot12

I always keep a credit card with a large credit limit for use in emergencies, in addition to my emergency fund as this gives me some extra leeway.

I would suggest that the size of your emergency fund should be aligned to the deferred period of the Income Protection insurance you have. In the Income protection insurance is deferred for six months, then have at least seven months of living expenses saved in the emergency fund. If you don't have Income Protection insurance, get some asap. It can be relatively cheap if you defer payments for a long time, e.g. six or twelve months.

cattie

I keep about 1yrs worth of expected living costs of savings money in easy access accounts, which include premium bonds. The rest of available money is split between s&s isa & various fixed term accounts. I favour 1yr accounts, but I never go for a fix over 2yrs.

I no longer have a mortgage to worry about & don't drive, so my outgoings are fairly minimal I guess.

stphnstevey

masonic wrote: »

I have a couple of months living expenses in current accounts and 24 x 1 months living expenses in 2 year fixed rate accounts with renewal dates 1 month apart. Though some of that is in lieu of investing in bonds in my S&S ISA.

If from the same company, what company allows this?
If different companies, that must be a admin nightmare!

masonic

stphnstevey wrote: »

If from the same company, what company allows this?
If different companies, that must be a admin nightmare!

Mostly the same company. I have no issue going to different providers periodically as they jostle for position in the rate tables though. The vast majority of my ladder is with BLME. I do also hold a few accounts with Gatehouse Bank.

The admin is not that difficult. I already have interest bearing accounts with half a dozen different banks paying 3-5%, not all of whom send an annual tax summary, so I record annual interest payments as they come in to my current account.

teameffort

We hold our emergency funds (approximatly six month of expenses) in interest paying current accounts.

This is easier as we can use the debt cards if needed without having to move money round and the intrest rates are better than the ISA's we looked at.

We also hold our savings in regular savers accounts spread out over the year so they mature every couple of months should we require the funds.

londoninvestor

stphnstevey wrote: »

If from the same company, what company allows this?

Does any company stop you doing this? I can't see why they'd want to put obstacles in your way.