How to Build an Emergency Fund That Actually Works

Why You Need One An emergency fund is your personal safety net — money reserved for unexpected expenses like medical bills, car repairs, or sudden job loss. Financial experts recommend building one before focusing on long-term investments because it shields you from debt when life takes a turn.

How Much Is Enough?

A good rule of thumb is to save between three to six months of living expenses. If you’re self-employed or have unstable income, aim for nine. Start by calculating your bare minimum monthly costs: rent, utilities, groceries, insurance, and transportation. Multiply that by your desired number of months to get your target savings amount.

Where to Keep It

An emergency fund should be accessible but not too easy to spend. High-yield savings accounts or money market accounts are ideal — they offer better interest than regular accounts but still let you withdraw funds quickly if needed. Avoid tying the money up in stocks or long-term bonds, which fluctuate in value and can’t be accessed instantly.

How to Build It Gradually

Start small. Automate a set transfer every payday, even if it’s £25 or £50. Over time, consistency outweighs contribution size. Redirect bonuses, tax refunds, or freelance income into your fund. If saving feels overwhelming, start with one month’s expenses — reaching that first milestone builds momentum.