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  • David Anderson

Emergency Funds: Your Financial Safety Net

One thing we can be sure of in life, shit will happen! Some of it you will see coming and some of it will blindside you, leaving you scrambling in a panic. An emergency fund is your safety net, your peace of mind and the only thing standing between you and debt!

This blog post will cover emergency funds in-depth, what they are, why they are important, how much to save, what emergencies could derail you and where you can save. I hope you enjoy it and learn something!

If you missed our last post you should check it out here - Beyond Numbers: Exploring the 10 Hidden Benefits of Financial Coaching.

So what is an emergency fund?

It is simply money put away for a rainy day. It is money away from your main pot of money used for day-to-day living, that is only to be used when an unexpected emergency strikes. It is not for a night out on the town when you don’t have money, simply because you can’t say no to your best friend! It's not for impulse purchases that you ‘must have!’.

A lot of people in the UK would struggle to cover a few hundred pounds of an unexpected bill at short notice, especially these days with the cost of living crisis that is going on. So having an emergency fund behind you allows you to avoid throwing the cost onto a credit card, payday loans or borrowing from friends and family. It helps you stay out of debt.

The way I like to describe an emergency fund to clients when I am coaching is that it gives you a solid foundation to build on. A house with rotting foundations won’t be standing for long, so let's make them as strong as we can and build from a position of strength!

Common Financial Emergencies

So what kind of things could come up unexpectedly and test our financial resolve?

  • Sickness/Injury – In most jobs within the UK we do get sick pay, but that soon runs out if you aren’t able to return to work.

  • Vehicle repairs – The car breaks down and you need to get it back on the road, it’s going to cost you!

  • Job loss – Unforeseen layoffs happen depending on your industry.

  • Home repairs – Accidents, natural disasters or general wear and tear.

  • Appliance failures – Appliances break down eventually. Washing machines, Fridges, Boilers. All of them are costly!

  • Death in the family – Funerals can be expensive.

  • Emergency travel – Family emergencies happen, maybe you need to fly home at short notice.

  • Pet bills – Unexpected veterinary bills for pet illnesses, injuries, or surgeries.

That is just some of the things that can come up that would be unexpected and may have a big impact on your financial situation. This highlights the importance of an emergency fund for financial security and peace of mind.

How much should I save in my Emergency Fund?

The amount I recommend to clients whilst coaching is to look to put by £1000 as a starter emergency fund. Build up to it, just put away what you can afford to. This is just enough that it should cover most emergencies at short notice.

Once you have the initial £1000 saved, I ask clients to build on this and look to put away 3-6 months of their living expenses. This might seem like a lot. But having this behind you gives you freedom from stressing, you know your bills are paid for 3-6 months regardless of what happens.

Things will come up when you are saving up your fund, you will need to use it for small emergencies that pop up. I personally have used mines for 6 tires on my car over the past 2 months. Yeah, 4 wheels, 6 tyres in 2 months! But once this is settled without using debt, you just get back to putting away what you can afford and build it up to the amount you are targeting.

Where should you keep your Emergency Fund?

There are lots of different places you can keep your emergency fund. All that really matters is that it is safe, secure and easily accessible when an emergency rears its ugly head!

Here are a few options of places where you could potentially keep your emergency fund.

  • Second bank account – open a new account that is your emergency account. Could be an online saver or a totally dedicated account.

  • Savings account – These may require a monthly deposit amount, but the interest will be better than a regular account.

  • Cash ISA – ISA stands for Individual Savings Account. These accounts are tax-free on the interest they gain and are easily accessible if you need to.

  • NS&I Premium Bonds – Easily accessible and you may win a monthly prize!

  • Apps – Plum, Revolut, and Chase are all apps that offer saving accounts. Plum also has digital wallets that you can move money into if you are saving for multiple things.

Remember, the main thing is that it needs to be accessible and safe.


Here is a quick summary –

  • An emergency fund is a pot of money kept separately for unexpected emergencies such as car breakdowns, job losses, sickness and appliance breakdowns.

  • Your Emergency Fund is for emergencies! Not for nights out or holidays!

  • Initially aim to save £1000 in your Emergency Fund.

  • Secondly, aim to save 3-6 months of living expenses.

  • Find somewhere safe, secure and easily accessible for your Emergency Fund.


I just want to set a small challenge for you if you don’t already have an emergency fund started. Put just £10 into a separate account out of the way of your regular bank account and aim to add to this every month. Let's build it up over time and give yourself the financial peace of mind that an emergency fund brings!

Thank you for reading this guide on emergency funds and their importance to you and your financial situation!


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