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Saving tips

How much emergency savings should I have?

2 minute read

What is an emergency fund?

An emergency fund helps prepare you for unexpected expenses. How would you cope with a large, unexpected bill? What if you have a leaking pipe or the exhaust has fallen off the car? These unexpected events could be stressful and costly but having an emergency fund could help alleviate this.

How much should I have in my emergency fund?

It’s recommended you have at least 3 month’s worth of living expenses in an emergency fund, ideally up to 6 months’. Here's a simple way to calculate this: 

  1. First, examine your budget. Read our quick guide to better budgeting here
  2. Then list out all of the expenses that need to be covered every month (rent, bills etc.)
  3. Finally, add them up and then multiply that figure by three or six (3 or 6 months)

How to build up your fund

1. Reduce your monthly outgoings

look at your budget and decide whether you are able to reduce any spending each month (then reduce it!)

2. Open a savings account

if you don’t have one already. You may want to consider opening a new one with instant access just for your emergency fund.

3. Set a savings goal

based on how much you need to have for an emergency fund. Once you’ve met your target, you could continue funding your other savings goals.

4. Pay yourself first

set up a regular payment into your savings account for when you are paid – just like you may do with a rent or mortgage payment.

Final thoughts

Hopefully now that you have a better idea of what an emergency fund is and what it should be used for, you could start building your own emergency pot so that you'll be prepared for if something unexpected happens.

Remember, everyone’s emergency saving fund will look different but the sooner you start saving and putting some money away, the better prepared you’ll be.

NatWest Money Blog team

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