Emergency fund: how much to save and where to start
What an emergency fund is, how many months of expenses is usually recommended, and how to start one even if you struggle to reach the end of the month.
What it's for
It is money set aside for real emergencies: losing your job, a breakdown, a family emergency. If you support relatives in another country, emergencies can come from there too, and a cushion keeps you out of debt.
How much
The rule of thumb often repeated is three to six months of basic expenses. It's a rough reference: with a stable job you can aim for the low end, and with variable income, the high end. Work out your essential monthly expenses (without leisure) and multiply.
How to start if money is tight
- Start with a small goal, for example one month of basic expenses. Reaching it motivates you to keep going.
- Automate it: set aside a fixed amount on payday, before spending.
- Keep it separate from your everyday account so you don't touch it by accident.
- If you get extra income (a bonus, a refund), put some of it into the fund.
When to use it
Only for real emergencies, not for sales or treats. If you use it, the next goal is to replenish it.