An emergency fund is the least glamorous money move you’ll ever make, and the one that makes every other move possible. It’s the difference between a setback and a spiral.
Start with one month
The usual advice is three to six months of essential expenses. That can feel out of reach, so don’t start there. Start with one month of rent, bills, groceries and transport, then keep building.
Find the money
- Add up your essential monthly costs. That’s your first target.
- Review your last two months of spending and circle three things you won’t miss.
- Send that amount to a separate savings account on payday.
- Direct windfalls straight to the fund: tax refunds, bonuses, gifts and side income.
Keep it boring
Your emergency fund isn’t for investing or for a great sale. It lives in a savings account you can reach within a day, earning a little interest and waiting quietly.
Peace of mind is a luxury you can buy in installments.
Define an emergency
Write it down now, while you’re calm: losing your job, medical bills, urgent repairs. A new handbag isn’t on the list, however urgent it feels.
When you use the fund, refill it before you return to other goals.
