Emergency fund: how much to save and where to start
AmanaFi team · Updated · 1 min read
An emergency fund is an easy-to-withdraw reserve kept for the unexpected: loss of income, a breakdown, health costs. The usual recommendation is to cover 3 to 6 months of essential spending.
Work out the target
Add up your monthly essential spending: rent, food, transport, health, bills, compulsory repayments. Multiply by 3 for a first target, by 6 if your income is irregular or you have dependants.
Start small so it lasts
Do not aim for the full figure at once. A first step of one month of essential spending already changes a lot.
- Step 1: one month of essential spending.
- Step 2: three months.
- Step 3: six months if income is irregular.
Where to keep it
In an easily accessible account, separate from your current account so you do not spend it by mistake. Avoid anything whose capital can fall or that locks the money: the goal is availability, not return.
Frequently asked
Should I repay debts before building an emergency fund?
Build a small fund first (about a month of spending) so the first surprise does not push you back into debt, then repay your debts while keeping that small cushion.
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