How much should I have for an emergency fund?

Millions of people in the UK are dangerously exposed to unexpected life events, according to the Financial Conduct Authority. Here we look at how much money you should have for an emergency fund.

The FCA’s latest Financial Lives Survey found 10% of people have no cash savings at all, while a further 21% have less than £1,000 set aside for emergencies.

The research, published in May 2025, found 9% of adults could cover their living expenses for less than a week. This is up from 7% in 2017. Lone parents, full time carers, renters and those who have experienced a relationship breakdown in the last 12 months were some of the groups most likely to be unable to cover their expenses for more than a week.

Read more: Average Household Savings & Wealth UK

Meanwhile 39% of adults have unsecured debts, owing on average £2,500. (Note: for reference, NimbleFins research separately put the average household credit card debt at £2,601 heading into 2026.)

Overall, around one in four people have low financial resilience, meaning they have missed payments, are struggling to keep up with commitments, or lack sufficient savings to cope with financial shocks.

How much should I save for emergencies?

Most financial experts recommend having an emergency fund that covers three to six months’ essential expenses. This safety net should be enough to cover essentials such as rent or mortgage payments, utilities, food, insurance, and debt repayments if your income unexpectedly stops or you face a major bill.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: "When it comes to savings, there’s a fairly simple rule of thumb. You should have enough cash to cover three to six months’ worth of essential expenses as emergency savings while you’re working.

“If you’re retired, you should think about holding more – one to three years’ is sensible.

“Of course, to do this you need to work out what counts as an essential expense for your household. You then need to calculate how much you spend on the essentials. And finally you have to decide where on the spectrum of three to six months or one to three years you should fall.”

Households with a single income, unstable employment, or self-employment may need larger buffers. In these cases, a fund covering six to twelve months’ expenses offers extra protection.

Lewis Broadie, NatWest Savings Expert, said: “Customers who start building a savings safety net tell us that the best way to do that is by setting a goal, which is personal to them, and committing to that goal by putting away a small amount each month.

“Doing this when you are paid, and taking the approach of saving little and often, means it all adds up quickly - resulting in less worry and more confidence for whatever the future holds."

How to build an emergency fund

The emergency fund is exactly what it says on the tin - only to be used for emergencies. Not holidays, house renovations or other luxuries.

The FCA found 90% of the 17,000 people it questioned had cash savings, but just 71% held their savings in some sort of product. And only 35% had investments.

The average was also £5,000-£6,000, but this is unlikely to cover six months of living expenses.

So how do you start saving for a rainy day?

Starting an emergency fund can feel daunting, but small steps add up quickly. Here are some practical ways to start building your buffer:

Pay yourself first: Set up a standing order to move money into savings as soon as you’re paid, so you’re not tempted to spend it.

Cut back on non-essentials: Review subscriptions like TV streaming, magazines or apps. Even cancelling a couple can free up extra cash.

Trim your daily treats: Swapping pricey coffees, takeaways or regular pub nights for cheaper alternatives can make a noticeable difference.

Pause bigger spending projects: Delay non-essential big purchases, renovations or luxury holidays until you’ve built up a solid safety net.

Redirect existing savings: If you’re already investing but lack emergency cash, consider temporarily diverting funds into your emergency pot.

Round-up savings apps: Some banking apps automatically round up your purchases and send the spare change into savings - painless and effective.

Put pay rises or bonuses to work: Every time your income increases, try to channel at least part of it straight into your emergency fund.

Sell unwanted items: Clear out clutter by selling things you no longer need on platforms like eBay or Vinted and add the proceeds to your savings.

What's the best savings account for me?

Building an emergency fund takes time, but where you save the money can make a big difference. While you want your savings to grow with interest, it’s also important to have access to your cash when you need it.

NimbleFins updates its Best Savings Account guide every few weeks with the best interest rates on the market. You can read it here: NimbleFins Best Savings Accounts Guide

Here’s a quick look at some common options:

1. Regular savings account

You may want to put cash aside each month, in which case a regular savings account could be a good idea.

These have the highest interest rates on the market but they often have caps on how much you can save.

If you're putting the same amount away each month, the best way to work out your return is to add up how much you'll have saved after 12 months, and then divide the interest rate in half.

Why? When you save a lump sum, you earn interest on the full amount for the whole year. But with a regular savings account, you're drip-feeding money in each month. That means:

Your first payment earns interest for 12 months.

Your second payment earns interest for 11 months.

Your third payment earns interest for 10 months.

And so on, until your last payment only earns interest for one month.

So, on average, your money is only in the account for half the year. That’s why, as a rough rule of thumb, you can take the advertised annual interest rate (AER), divide it by two, and apply that to your total savings after 12 months to estimate your effective return.

Read more: Can you put aside cash each month? This is the type of savings account for you

2. Instant access savings accounts

An instant access savings account (sometimes called easy-access) lets you withdraw money at any time without penalty, making it ideal for emergency funds. You can get to your cash immediately if something unexpected happens,whether that's a broken boiler or sudden car repairs.

While instant access accounts tend to offer lower interest rates than fixed or notice accounts, the flexibility is worth it for money you may need at short notice. Many of the best deals are available online or via app-based banks, so it’s worth shopping around for a competitive rate.

3. Notice savings account

A notice savings account pays higher interest than an instant-access account, but you must give advance notice before withdrawing your money -often 30, 60 or 90 days. This can work well if you're building your fund but don’t need instant access to every penny.

The delay in withdrawals can actually help prevent you dipping into your emergency fund unnecessarily, while still keeping the money reasonably accessible for genuine emergencies. Just make sure you’re comfortable with the notice period and check if there are penalties for withdrawing without notice.

4. Fixed savings account

A fixed savings account (or fixed-rate bond) locks your money away for a set period, typically one year or even longer, in exchange for a guaranteed interest rate. These often offer the highest rates but aren’t usually suitable for emergency funds because you may not be able to access the money quickly if needed.

If your emergency fund is large enough, you might choose to keep part of it in a fixed account to maximise returns, while keeping the rest in easy-access or notice accounts for flexibility.

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