Bureau of Wealth

Emergency Fund Calculator

By the Bureau of Wealth team Updated

This calculator is general information, not financial advice. Check your own figures with the provider or a qualified adviser before acting on them.

Enter your essential monthly outgoings and how many months you want to cover to see your emergency savings target, what is left to save and how long it will take.

Rent or mortgage, bills, food, transport and minimum debt repayments.

Check the highlighted fields to see your results.

What this calculator assumes

  • The target is your essential spending each month multiplied by the number of months you choose. Nothing extra is added for one-off costs such as a new boiler or an insurance excess.
  • Your essential outgoings stay the same while you save. If your rent or bills go up, rerun the calculator with the new figure.
  • The time to reach the target divides what is still to save by the amount you add each month, rounded up to a whole month.
  • Interest is not included. An easy access account paying a decent AER would shorten the time a little, but the effect is small over a year or two.
  • You do not dip into the pot while you are building it.

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How the target is worked out

Emergency savings are money set aside for things you cannot plan for, such as losing your job, a sudden illness or a car that will not start. The calculator bases your target on essential outgoings, the costs you would still have to pay if your income stopped: rent or mortgage, council tax, energy and water bills, food, transport and minimum debt repayments.

It multiplies that monthly figure by the number of months you choose, takes off what you have already saved, and divides the rest by what you can add each month. The result is rounded up to whole months, and the progress bar shows how much of the target you already have.

A worked example

Say your essential outgoings are £1,800 a month, you want three months covered, you have £1,000 saved and can put away £200 a month. Your target is £5,400 and you have £4,400 still to save, which takes 22 months. Saving £300 a month instead cuts that to 15 months.

Choosing six months doubles the target to £10,800 and leaves £9,800 to save, which would take 49 months at £200 a month. A first goal of one month, £1,800, would be reached in 4 months.

What MoneyHelper recommends

MoneyHelper, the government-backed guidance service, suggests a rule of thumb of three to six months' essential outgoings kept in an instant access savings account. Its example is someone spending £1,000 a month on rent or mortgage, food, heating and other things they cannot live without, who might aim for £3,000 to £6,000.

If you are starting from nothing, MoneyHelper says one month's worth of expenses is a great place to begin. It also points out that saving smaller, regular amounts is often more effective than saving larger sums now and again, and that whatever you can put away will help if things go wrong.

Choosing the number of months

Lean towards six months or more if you are self-employed, your income varies, you are the only earner in your household or you have children. Three months may be enough if your job is secure or there is a second steady income at home. Check what sick pay your employer offers too, because it affects how long your savings would need to last if you could not work.

Where to keep it

An instant access savings account lets you withdraw money when you need it while still earning interest, and MoneyHelper notes you can open one with as little as £1. Keep it separate from your current account so it does not get spent on everyday things. Setting up a standing order for payday makes the saving automatic. Check the provider is covered by the Financial Services Compensation Scheme.

Once your emergency savings are in place, the money you were paying in can go towards other plans. The savings goal calculator shows how much to put aside each month for a specific target and date, such as a house deposit.

Frequently asked questions

How much emergency savings do I need?

MoneyHelper suggests three to six months of essential outgoings in an instant access account. If that feels a long way off, it says one month's worth is a great place to start.

Should I count all my spending or only essentials?

Only essentials. In an emergency you would cut back on takeaways, subscriptions and nights out, so including them would give you a higher target than you need.

Should I save or pay off debt first?

Many people build a small buffer first, around one month's essentials, and then focus on expensive debt such as credit cards and overdrafts. Without any savings, an unexpected bill can push you into more borrowing.

Can I keep emergency savings in a Cash ISA?

Yes, as long as it lets you withdraw quickly without losing interest. An easy access Cash ISA means the interest is tax-free, although many people pay no tax on savings interest anyway.

Should I invest my emergency fund?

Generally not. Investments can fall in value just when you need the money, and selling at the wrong moment can turn a short-term problem into a lasting loss.

Sources

Figures come from institutions millions of people rely on. How we keep calculators accurate.