how much should i be savings for emergencies?

homersimpson_3

this weekend had alot of things breaking in the house which will be expensive to sort out this week and knock a hole in my emergency fund. :mad: but it's got me thinking about how much i should actually be saving per month to cover emergencies and the like. some say 3 months salary; other say 6 months. (presumably net salary?).
is there any 'true benchmark' or does it just depend on individual opinion. should i be saving a % of income. if so what. just don't want to be a position didn't have enough money to get myself out of trouble.
thanks

GIRLPOWER_2

Thanks for this question not been with the site long so have been thinking about this one myself.. I have thought that I will use my new 0% on purchases for 12 months credit card when they happen then I can work out how much I will need to pay them off once the emergency has happened.. don't know if this is right or wrong but it will be interesting to hear what the others do.

tinalives

I thought I'd heard that it should be at least 3 months worth of expenses, but not sure.

homersimpson_3

unfortunately cannot use my 0% credit card because already using that to stooze on mortgage (and doing this does reduce payments). so if others post please advise what they would do if you were in my position. following the advice so far has resulted in my being better off. thanks

Mark7799

I personally have worked on 3 months' worth of expenses but that's only to cover me in the emergency of losing my income. I believe I could get something to generate income if it was lost through redundancy/dismissal and if I was on the sick my IRP would kick in after 3 months.

For unforseen expenses I would work on having about £500 in liquid funds - above that it would be credit cards/bank loans

nearlyrich

I think it depends on what you call an emergency, for example if you drive to work and there is no alternative, if your car breaks down you can't get to work, having the cash to fix it would be good. Some people can fix their own, just buy the parts,they would need less of a fund for car emergencies than someone who has to find the money to pay a mechanic to fit them.

I like to have enough in liquid funds to cover my work expenses for a couple of months if I can't catch up with the boss to sign off the paperwork, I keep it in a reasonably accessable but interest paying savings account.

It's always going to depend on individual circumstances.

newfoundglory

Yeah, I believe most advisors recommend 3 months wages.... building up to 6 months if possible (this depends how much you earn I guess, as to whether you can save this much on top of other commitments).

Rafter

It depends how long it would take you to rebuilt your regular income really.

If you have a specialised job for example it may take you 6 months to find a replacement if you were made redundant.

If 3 months is the time it would take you to find a new job then that should be your emergency fund.

As to whether it is better to hold the fund in an immediate access account or nave a notional fund of spare capacity on a credit card that is up to the individual. With instant access accounts having more competitive rates these days, I'd probably go for the former.

As you have an offset mortgage though from the sounds of it, do you not have headroom on that? No point keeping money in a taxed savings account earning 3% net if you can save 5.5% off your mortgage by holding it there?

R.

Xbigman

3 months wages or 6 months living expences. Remember, if you lose your job and have more the 3k in the bank any benefits you get will be reduced, more than 8k and they vanish.
Regards



X

tinalives

Xbigman wrote:

3 months wages or 6 months living expences. Remember, if you lose your job and have more the 3k in the bank any benefits you get will be reduced, more than 8k and they vanish.
Regards



X

Ahhhh, I didn't realise that!

gallygirl

Rafter wrote:

As you have an offset mortgage though from the sounds of it, do you not have headroom on that? No point keeping money in a taxed savings account earning 3% net if you can save 5.5% off your mortgage by holding it there?

R.

This is what I do - never keep any spare cash as would just spend it...... and I know I can get money back in a few days in necessary.
Mortgage is with Egg and offset is avings only - but as operates electronically you can transfer in & out as much as you like - we have some BTL's and put all rent in Egg account till mortgages due.
Am really sad - with each amendment I recalculate pay off date!:o