An emergency fund protects you from debt when life surprises you. Learn how to size it and grow it step by step.
Job loss, medical bills or car repairs can happen to anyone. An emergency fund lets you handle them without borrowing.
How Much to Save
A common guideline is three to six months of essential expenses. Those with irregular income or dependants may want more.
Start Small
- Save a first small target, such as one month of rent
- Automate a fixed transfer on payday
- Add windfalls such as bonuses or tax refunds
- Increase the amount when your income rises
Where to Keep It
The money should be safe and easy to reach. A separate savings account with a reasonable interest rate works well. Avoid investing emergency money in shares, which can fall just when you need them.
What Counts as an Emergency
Use the fund for true unexpected essentials, not holidays or sales. Refill it as soon as possible after using it.
