What is an emergency fund?

An emergency fund, also called ‘emergency savings’, refers to money that is set aside and only used in case of unplanned events. These unplanned events could be anything from needing a new washing machine to sudden unemployment.

How much money should I have in an emergency fund?

According to MoneyHelper you should have at least 3 to 6 months of expenses available to you at any one time. This means that if you ever have unexpected costs such as vet bills or your car fails its MOT, you will always have some money to hand.

It is also helps if you keep your savings separate from your emergency fund. This will help to make sure you’re not tempted to spend your emergency fund on the things you’re saving for, like your next holiday.