How to Save Money: How to build an Emergency Fund

“You must gain control over your money or the lack of it will forever control you” –Dave Ramsey

I’ve found recently that whilst knowledge may be power, its also pretty darn scary! After literally hours and hours of searching the internet on all things finance, its seems the universe (well Google) is trying to tell me I may already be too late. I should have already been saving 10% of my wages for the last twenty years, I also should have been planning for my retirement (conventional age 65 of course) as soon as I turned 30 so I’m already late to the saving party. After taking a few deep breathes I’ve decided that the best way to start saving is to begin with an Emergency Fund.

Seventh Post

The Emergency fund is exactly what it sounds like: a pot of money set aside for emergencies such as a boiler breaking, the car not starting and being out off work for a few months.

How much is enough?

This is definitely a one size does not fit all type of question! Its fairly easy to work it out though and there are two ways to do it.

  1. Simply aim for three months wages. You know you can survive on it as you do it every month,
  2. Work out what you spend each month on mortgage/rent, food and heating bills, and other things you cant live with out. Aim to have three months worth.

How much is too much?

The jury is still out on this. My very inexperienced take on it is that you don’t really want to have more than six months worth of emergency cash no matter which method you use for calculating. Quite simply put its a bit of a missed  opportunity, don’t you think? Your missing out on the opportunity to gain a better interest rate.

Where do I put it?

Its up to you really, Cash under the bed or in an instant saving account is still cash that can be accessed quickly, although the former runs the risk of getting spent or lost/stolen. The best bank account is one that gives you quick, easy and penalty free access to your cash. I’ve had an instant saving account since the beginning of time (not literally) and I’m sure it will work just fine.

Whats next?

So once you’ve saved up your magic emergency fund number, whats next? I’m going to be researching Isa’s next so I’ll let you know.

Where are you up to with your emergency fund?




9 thoughts on “How to Save Money: How to build an Emergency Fund

  1. Well done for making a start. Better late than never. I too have left it too late for proper FIRE, or FIRE at all maybe (keeping apart my small to no chance of a massive windfall!), but it has put me back in the driving seat of my finances, which is a positive thing.
    Our emergency fund is not very well defined currently because of various conversations yet to be had with Mrs Serus, but we do have something there for the unexpected. My aim would be 3 months total household income entirely dedicated as “the emergency fund”… least to start.
    Good luck with the move!


    1. Thanks for your comment. I totally understand your situation. Wish I could travel back and tell my 17 year old self to start planning for fire! I guess all we can do is make the best of the time we have now and cross our fingers!
      Keep me posted on your emergency fund too please? Would love to follow your journey too.


  2. I only recently realised the importance of having an emergency fund, which I guess is the reason why I was bogged down with credit card debt for so many years.

    With my finances more in order, my emergency fund currently covers 3 months’ of expenses – it’s all cash, split between a Tesco current account (pays 3% interest on balances up to £3k) and a TSB current account (pays 5% interest on up to £1.5k).

    I also use the fund to spread the payments of large purchases, eg car insurance £360, I’ll pay in full from the emergency fund and then set up 6 x £60 standing order payments to ‘pay back’ the fund. This way, I don’t get charged for paying my insurance in instalments.

    Good luck with getting your emergency fund going!


    1. Hi Weenie,

      Thanks for you comment and all your amazing advice! I’m in awe at your Financial Savy ways 🙂 I didn’t realize current accounts came with rewards just for keeping money in the account. That’s a new one to me but its an amazing place to keep the emergency fund stash!

      Thanks Again x


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