Wednesday, 21 June 2017

Living on a Shoestring - The Emergency Fund

You might be shocked to hear but a long time ago I thought my credit card was my emergency fund ! Then one day there was an emergency and there was not enough credit left on the card to pay for it ! Oh dear ! We had to get a loan and I had to learn to save !

The recommended amount in an emergency fund differs according to who you speak to, with most suggesting 3-6 months worth of living expenses. This took us a long time to save up and we only have 3 months worth saved not 6. Since we have had 2 earners in the family this seemed enough as it was very unlikely that for instance both of us would be without income for longer than 3 months at the same time. But we started with just £100 emergency money. That was enough to visit a sick relative or buy a second hand washing machine !

After that we saved £500, enough for a  ticket to Australia or USA where we have close family. After that our target was £1000 and then one month's living expenses. Now we keep £5000 in an instant access account which pays interest but is not easy to get to on a day to day basis. That money is for real emergencies, not new boots, haircuts or medical expenses we can budget for.

Now that we have the account fully funded we have never used it, but we did use those smaller amounts on the way to having it ! We think that it is important to know that you have a cash flow problem covered so that you can take your time thinking through the best way to tackle an emergency.

What do you do ?


  1. Thank you very much for your lovely blog. I look for it every day! I think it's a great idea to have an emergency fund. Mine is not very big at the moment but I am trying hard to keep adding to it. Well done on your fund. The peace of mind it brings must be good. Kindest regards, Maureen.

  2. Dear Maureen,

    Thank you for your kind words, it means such a lot to know that someone is reading and looking for the posts ! Do feel encouraged to keep on adding to your fund, we only got there a bit at a time but it is great to feel that cushion.

    Have a good day !

  3. Thank you for your blog. Since I discovered it I have been playing catch up from the beginning.
    The trouble with that is that there are so many good ideas!
    We have a standing order which takes out a regular amount from our current account as soon as our pensions are paid in and puts it into a separate one. The interest is laughable but, as you say, peace of mind is there in case of emergencies including the fact that our children may need help if something really dire happens to one of them.
    (They are not aware of this because I firmly believe that they must be totally independent for their own wellbeing and pride's sake.)

    1. That is such a good idea Sue, I had heard of people doing that but had never tried it myself. I always wait to see how much money is left at the end of the month. I can see the sense in making it a priority at the start of the month though, so might try that from now on !

      Glad to hear you have found lots of good ideas !

  4. I agree how important this is! During my working career, I made great money but never had an emergency fund. When I turned 50 and got serious, It took me probably three years to finally get $1000 set aside safely...where I didn't go to it to buy things...but really kept it for emergencies. But after that, I managed to grow it to $10,000....I think the first money is the hardest because I had to break the bad habit of robbing the fund. ;)

  5. That is so true about learning not to rob the fund ! Congratulations on having it fully funded now !

  6. I am a 47 portuguese techer and I have been reading your blog for months. It is really very helpfull and an inspiration to save. My aim is to pay my mortgage next year and have a bigger emergency fund (now is about 1000 euros ). Thank you very much and continue the excellent work you are doing with your blog. It's really an inspiration for people to have a better life !

  7. Hello Maria ! I am delighted to hear that you have the inspiration to save, 1000 euros is a great start ! I love that we are all on our way to a better life !