How much money should you have saved for emergencies?
Ask different people this question and you’ll probably get very different answers.
Some financial advice suggests having several months of essential expenses saved.
But if you’re currently living on a tight budget, that can sound completely unrealistic.
The truth is, there isn’t one magic number that works for everyone.
The most important thing is to start somewhere.
What is an emergency fund?
An emergency fund is money you keep aside for unexpected expenses.
It’s not your holiday fund.
It’s not your Christmas shopping money.
It’s not money for a night out.
It’s there for things you didn’t plan for.
For example:
- A broken washing machine
- Car repairs
- An unexpected household bill
- Emergency travel
- Replacing essential appliances
- An unexpected expense for your children
- A period when your income is lower than usual
Having money available for these situations can mean you don’t automatically have to borrow.
Start with your first £100
If you don’t currently have any emergency savings, don’t worry about trying to build a huge fund immediately.
Set yourself a first target of £100.
Saving £5 a week would get you there in 20 weeks.
Saving £10 a week would take just 10 weeks.
Once you reach £100, set another target.
Try £250.
Then £500.
Then perhaps £1,000.
Breaking a large goal into smaller milestones makes it feel much more achievable.
What if you can’t afford £5 a week?
That’s OK.
Save £2.
Or £1.
The amount matters less than creating the habit.
At Whitehaven, Egremont & District Credit Union, members can save as much or as little as they wish, with regular saving encouraged to help build a reserve for future expenses.
For example:
£2 a week = £104 a year
£5 a week = £260 a year
£10 a week = £520 a year
Small amounts can add up.
Keep your emergency savings separate
One of the easiest ways to accidentally spend your savings is to keep them mixed in with your everyday spending money.
Having a separate savings account can make it easier to see what is genuinely available for emergencies.
It also creates a psychological barrier between your everyday spending and your emergency fund.
With Whitehaven, Egremont & District Credit Union, members can save regularly and access their savings when needed, subject to the terms of any loan they may have.
Make it automatic
If you have to remember to save every month, it’s easy to forget.
Instead, consider setting up an automatic payment shortly after payday.
That way, your savings happen before you have the opportunity to spend the money elsewhere.
Our members can save through standing orders, cash payments and payroll deduction schemes.
Payroll saving can be particularly useful because the money is taken directly from your salary before it reaches your everyday spending account.
Don’t stop saving once you reach your target
An emergency fund isn’t something you build once and then forget about.
You may need to use it.
If your car breaks down and you use £200 of your savings, don’t think you’ve failed.
That’s exactly what your emergency fund was there for.
Simply start rebuilding it when you can.
What about larger financial emergencies?
Once you’ve built a smaller emergency fund, you can gradually work towards having enough to cover several weeks or months of essential expenses.
This might include:
- Housing costs
- Energy bills
- Food
- Travel
- Essential insurance
- Council tax
- Minimum debt repayments
How much you ultimately need will depend on your circumstances.
If you’re self-employed or your income varies, you may want a larger financial buffer.
If your income is regular and you have good job security, you may feel comfortable with a smaller emergency fund.
There is no one-size-fits-all answer.
Saving can reduce the need to borrow
Perhaps the biggest benefit of emergency savings is peace of mind.
Imagine an unexpected £200 bill arrives.
Without savings, you may have to borrow.
With £300 sitting in your emergency fund, you may be able to deal with the expense without taking on new debt.
That doesn’t mean everyone can avoid borrowing all the time.
But having some money put aside gives you more choices.
Start today – even if it’s small
You don’t need to wait until you can afford a large amount.
Put aside £1.
Then do it again next week.
The goal isn’t to become a perfect saver overnight.
It’s to gradually build a financial safety net that gives you more control when life throws an unexpected expense your way.
At Whitehaven, Egremont & District Credit Union, we encourage people across Cumbria to save regularly and build a reserve for the future, to help improve the financial resilience of our community.
Ready to start saving? Find out how we can help you build your savings, one small amount at a time.