Here are the answers to some top questions about emergency funds. How much should you have in your emergency fund? In a nutshell, you should have at least 3 to 6 months\’ worth of expenses but the exact amount depends on a few variables. How does your emergency fund fit in with your other goals? Because your overall financial picture has many moving parts, it\’s important to see how your emergency fund fits in with the rest of your priorities. Where should you keep your emergency savings? can be a great place to hold your emergency savings because they\’re safe and accessible.
The best way to build up an emergency fund is by saving money every time you are paid, e. g. monthly.
The easiest way is by setting up for a certain amount or a. This can move any money you have left at the end of the month from your current account to your savings. Choosing an account with a high interest rate means your savings grow quicker, but are usually unsuitable. They often don\’t let you withdraw until the end of the fixed term, even if you need the money in an emergency. As well as paying in regularly, you can boost your savings if you get extra money from: Paying off a loan or credit card, leaving you with more money available each month You could pay this extra money into your savings to build up your emergency fund quicker.
The interest you pay on your loan, credit card or mortgage is likely to be much higher than the interest you can get on a savings account. This means paying off your debts could save you more money than a savings account could make you in interest. But raiding your savings could leave you short of money in an emergency. Here is how to decide if you should. You can pay for some emergency bills with an insurance policy instead of saving up to pay them yourself.
You can cover: Insurance policies can make covering a large cost more manageable. But you do not get the money you pay for the policy abck if you do not need to claim. These can all be expensive, but using an or a could let you borrow for free, as long as you pay it back in time. If you get a loan, here is how to. Can you still get a decent return on your savings? Your ultimate checklist for getting control of your cash Are ISAs still worth it? What is the best way to save for your child? What are the best ways to pay for your wedding?