Emergency Fund: How much and where?

gtat

Reading the 'number' thread got me thinking a bit more about emergency funds. I feel we have a satisfactory emergency fund, but I'm not sure we are making it work as hard as it could be, although I appreciate EFs are low risk and low return by their very nature. Of course it needs to be easy access, but a lot of people seem to have theirs in premium bonds, for example - ours is just across a few current accounts.

It would be really interesting to know more about everyone's emergency fund - how much do you have as your EF (relative to expenditure) and where are you keeping it?

Number of months expenditure as emergency fund:
% in current accounts:
% in regular savers:
% in premium bonds:
% in other (please specify!):

Mine is simple..
Number of months expenditure as emergency fund: 6 months
% in current accounts: 100
% in regular savers: 0
% in premium bonds: 0
% in other (please specify!): 0

ex-pat_scot

The most efficient way of holding cash-like emergency funds is to have an offset mortgage.
Check the rights of off-set carefully though.

JoeCrystal

Zero atm due to unforeseen circumstances. 😑 But normally I would try keep six months expense in current accounts. I do have three months in fixed rates bonds until 2024 which is a big mistake in hindsight...

flipper_72

Number of months expenditure as emergency fund: 6 months
% in current accounts: 0
% in regular savers: 0
% in premium bonds: approx 45% but this is increasing by £500 per month (to gain £5 in my Halifax account for spending £500 on debit card)
% in other (please specify!): cash isa 45% decreasing as above, bog standard linked saving account 10%.

We are 12 years from our hopeful retirement at 60 and are now putting all spare money into SIPP s after realising that it is a better long term return than overpaying the mortgage.

kuratowski

Due to my envelope based budgeting system the total amount of cash I am holding is approx 15 months' worth of expenditure.  Of this my designated "emergency fund" is 6 months; this is for income loss.  I have approximately a further 9 months' worth of expenditure designated in various categories, e.g. boiler breakdown, so that I don't use my emergency fund for anything other than redundancy.

Approx 25% is in current accounts, 15% in a fixed rate Cash ISA (can always be withdrawn with penalty), and 60% in instant access savings.

Amateurretiree

We are retired and fortunately I have a DB pension which covers all essential outgoings, DH has a SIPP in drawdown which we use for non essential day to day expenditure like meals out etc and holidays.

But we like to have a good amount of cash with easy access in case the boiler should need replacing, family emergency etc so we keep 10 000 just in a normal low rate savings account for easy access.

brewerdave

We have ~ one year's expenses put aside in two "easy access" online savings accounts, one in each name.
Now we are both retired and receiving virtually all our income from pensions , I suppose we don't really need the accounts but there isn't anything particularly attractive to do with the money currently.

Anonymous101

I operate a two tier system.*
Level 1 "emergency fund" is what most people would think of cash and premium bonds. 
Level 2 "safety net" I view any bond investments (held in accessible accounts such as ISA's) as part of a wider financial robustness plan.

* I will caveat by saying I do have a 3 month notice period at work and relevant insurances, so baring the company going out of business my income should continue for 3 months minimum. This could be thought of as Level 1A perhaps?

By using this system I'm able to take the view that I'm comfortable with level 1 being at the bottom of the typical 3-12 month scale, typically 2-3 months. This is held 50/50 between current accounts and premium bonds.

When thinking this through I concluded that almost all unexpected bills (known unknowns) would fall into the 1 month cash spending pot. The premium bonds are there in case two of these occur in relatively short space of time or the cost is unusually large. I would also have the option of credit cards to smooth the cash flow over 60 days or so which would give some thinking time.

The Level 2 fund is there for either true unknowns, or loss of income scenario's whether that be a sabbatical, retirement or an extended period forced through redundancy.

I think this approach covers my needs well which is what its all about. Its not a one size fits all approach, much like asset allocation.

bluenose1

Not sure I would call it my emergency fund, but I suppose it is as easily accessible.
Like anonymous101 I am still working so would get at least 3 months notice and even if they did make me redundant have sufficient in my DB pensions/ DC pot to now retire.

Number of months expenditure as emergency fund:  6 months 
% in current accounts: 10%
% in regular savers: 0%
% in premium bonds: 90% and growing, my understanding is the money will be in my account within 3/4 days. Would keep in easy access savings accounts if better interest rates.
% in other (please specify!):
Depending on the emergency would use my credit card if required whilst waiting for any funds. 

LHW99

Don't generally keep emergency money in current accounts, generally prefer 3-6 months in a cash ISA and maybe another 3 in easy access in the same bank as a current account.

That said we've rather more than that in easy access at the moment due to particular circumstances.

tigerspill

I hold 5 years in cash (PBs and savings).  This is more than emergency money as I am in retirement and this cash also helps mitigate a poor sequence of returns.