How much cash for house emergency?

Spender£

I keep most of my cash in various investments for long term and pension and to guard against inflation.

A friend had an electrical fault recently which led to him needing a full house rewire. He is having to pay around 7k including decorating etc and of course home insurance does not cover this from what I understand.

I am concerned because I only keep about 5k in a cash account plus about 600 inside the house for emergencies, I keep low amounts worrying about inflation eating into the cash.

Does anybody know a good number to keep liquid in case if emergency as I am now wondering if I might need to go to 10k.

Swipe

I guess it depends on your circumstances. I'm retired and had to drop £15K on a new roof a couple of years ago. Glad I had the spare cash and plenty to spare in my emergency fund to cover it. I'd say £10K as the very bare minimum.

StewedApple

Does anybody know a good number to keep liquid in case if emergency as I am now wondering if I might need to go to 10k.

How long is a piece of string?

Only you can decide what is a sensible/practical figure, but then maybe the answer is more about where you keep it liquid - an easy access account attached to a bank account so you can get at it immediately, in some premium bonds (about a week), some in an ISA you're willing to sacrifice the tax advantage on. Maybe short-term borrowing e.g. a credit card or two. A mixture of all these.

If you need more money a loan may be more liquid that disposing of investments.

masonic

Don't forget if you don't have anything adverse lurking in your credit files, you will probably be able to secure a 0% credit card to spread the cost.

A typical emergency fund of 6 months living expenses would probably cover you for home emergencies as well as loss of income. If the two coincide, then perhaps things will get tricky!

Albermarle

Cash interest rates are currently above inflation rates, so keeping a decent emergency fund is not such a bad idea financially.

El_Torro

As a guide the typical suggestion is to have between 3 and 6 months worth of expenses in an emergency fund. Just a guide, everyone needs to decide their own figure. Though I would suggest that someone would need a very good reason to have less than 3 months worth of expenses in cash.

Personally I have about a year's worth of expenses in cash. I have my own reasons for this which I won't go into here. Some will say it's too much cash, I'm happy with the figure though.

UnsureAboutthis

How long is a piece of string?

If you can - always keep 15k depends on size of property, bedrooms, bathrooms, etc etc the more bathrooms you have the more rooms, the more sockets, doors/loks, etc., the bigger the potential cost along with CH costs

I find having a very good sum of cash avialble as a big peace of mind, just instills confidence when you are feeling low

Borriwng money is like throwing money down the draine, ie adding insult to injury when things go wrong

GeoffTF

What about your "various investments for long term". Is there a problem with selling some of those to raise cash? Most emergencies do not require immediate payment. You will usually have time to sell investments before you have to pay up. It is sensible to keep some cash to pay for the more likely contingencies though. I decided that £3K of instant access cash was enough for me a couple of years ago.

SpeedSouth

I have around £20k just under 6 months spending. That would pay for a new car/boiler in the same month. Or if I lost my job/became ill for a period. Probably overkill as I absolutely could get more 0% CC than I currently have.

leosayer

Personally I would not be comfortable with "only" £10k in easy-access cash but everyone's different.

The primary job of this money is as a safety blanket to protect against emergencies so it needs to be in something easy-access and FSCS protected.

If you can use it generate an above-inflation return whilst meeting the above criteria then great - I certainly try and do that and switched to Tesco savings recently to get 4.53%.

subjecttocontract

I like to keep some money in accounts that I can get my hands on in an emergency but I balance that need with trying to maintain a good return. Thinking about it I probably have far to much in easily accessible accounts. In addition to premium bonds I keep £50K in a flexible ISA & another £25K in easy access accounts. The rest is in various fixed term accounts, but never fixed for more than 1 year. We are all different so there isn't a one size fits all.....it's whatever you feel comfortable with