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Is having an ‘Emergency Fund’ enough? Should I have more ‘funds’?

Is having an ‘Emergency Fund’ enough? Should I have more ‘funds’?

We all should have emergency funds aka instant access savings accounts with enough money to cover you for emergencies, they should only be used for things like:

  • If you lose your job, you should have enough money in your emergency fund to keep you going (e.g. fed, watered, warm & housed) for at least 2-4 weeks but we would recommend 3 months worth of essentials
  • Enough cash to get you home from any location you plan on going in the next year, imagine you’re on holiday, there is a disaster and you need to get home. Do you really want to be trying to borrow money from someone in an emergency?

In the past we’ve also recommended having this emergency fund ready to fund the cost of:

  • Common car repairs such as new brake discs (£200-£500)
  • Car insurance excess (£check your paperwork)
  • Boiler repair, freezer, fridge, oven repair etc
  • Car tyres (however you should plan for this with one a Tyre Tread Gauge)

However, we’re now thinking this secondary list of items should really be called ‘rainy day’ fund, ‘life sucks’ fund, ‘life just happens’ fund or something similar. Psychologically, we think it’s better to never dip into your ’emergency fund’ but also to get you out of the mindset that these secondary emergencies are actually emergencies at all, in reality, you should have been planning for them at the beginning of the year and factored them into your yearly outgoings but as humans we generally can’t be bothered to plan that far in advance.

The split of emergency funds & ‘rainy day’ funds also ensures that you [ideally] keep exactly the right amount of months worth of outgoings ready in your emergency fund and really only ever use it for emergencies (hopefully never).

The difference:

  • The emergency fund is always kept at the (cost of your monthly outgoings) X (amount of months you want to feel secure) & only ever used for real emergencies
  • The ‘rainy day’ fund is (roughly the amount you’ve spent over the past 1 year on unexpected outgoings for non-essentials) / 12 months) X (amount of months you want to feel secure) – you use it when you’ve got an unexpected bill and top it back up when you can

Do you have an emergency fund? (Anonymous Poll)


How much is in your Emergency Fund?