Emergency Fund UK: How Much to Save and Where to Keep It (2025)
Complete guide to building an emergency fund in the UK. Learn how much to save, where to keep it for best interest rates, and proven strategies to build your financial safety net even on a tight budget.
Building an emergency fund while budgeting requires strategy. This guide shows how to save even on a tight budget.
| Strategy | Monthly Savings | Annual Total |
|---|---|---|
| Round-up apps | £20-50 | £240-600 |
| No-spend days | £50-100 | £600-1,200 |
| Bill switching | £30-80 | £360-960 |
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Frequently Asked Questions
How much should I have in my emergency fund?
Aim for 3-6 months of essential expenses for most people. Self-employed or single-income households should target 6-12 months. Start with a £500-£1,000 starter fund if the full amount feels overwhelming. Calculate your target by multiplying your monthly essential expenses by your target months.
Where is the best place to keep an emergency fund in 2025?
Keep it in an easy access savings account earning 4-5% interest, such as Chase Saver (5.1%), Marcus by Goldman Sachs (5.0%), or a Cash ISA like Moneybox (4.75% tax-free). Avoid stocks, fixed-term bonds, or keeping it in your current account. You need instant access and stability.
Should I pay off debt or build an emergency fund first?
Build a £500-£1,000 starter emergency fund first, then focus on high-interest debt (over 10% APR). Once that's cleared, build your full 3-6 month emergency fund before tackling lower-interest debts. Always continue making minimum payments on all debts while building your fund.
What counts as a real emergency?
True emergencies include job loss, urgent medical/dental expenses, essential home repairs (heating, plumbing, roof), car repairs needed for work, or family emergencies requiring travel. Holidays, gifts, new purchases, or planned expenses are NOT emergencies and should be budgeted separately.
How long does it take to build an emergency fund?
It depends on your savings rate. Saving £200/month builds £1,000 in 5 months or £6,000 in 30 months. Start with small milestones (£500, £1,000, 1 month's expenses) to stay motivated. Use windfalls (tax refunds, bonuses) to accelerate progress.