Three to six months is the rule of thumb, not the answer. The real number depends on the job, the dependents, and what backup income exists.
The non-negotiables. Not lifestyle, not holidays. What it takes to keep the lights on.
How quickly income could come back, and what backup exists in the meantime.
Partway there. The cash on hand covers 0.8 months of essentials.
£8,600 to go. At £2,650 a month in essentials, the target is 4 months of cover.
Illustrative figures only. The right buffer depends on job, dependents, and contingency planning that no calculator can fully model. For your specific situation, consult a qualified adviser.
Worth maps the emergency fund into the order of operations: the cash floor that has to land first, then the debt payoff, then the investing engine. Join the waitlist.
Just essentials. The point is survival, not preservation of lifestyle. If income drops, you cancel the subscriptions and stop the restaurants. The fund needs to cover housing, food, utilities, transport, insurance, and dependents. Not holidays, not the gym.
Yes. The opportunity cost of holding six months of essentials in cash versus investing it is small over a decade. The cost of not having it can be large: selling investments at a market low, taking high-interest debt, or making a forced career move. Insurance against ruin, not a competitor to the portfolio.
Useful as a backup, dangerous as the primary. Banks tend to pull credit lines during recessions, exactly when they would be needed most. A pre-approved line of credit is a fine secondary layer. The first line should be cash you control.
It starts from a base anchored to employment type (employee, stable industry sits around three months; self-employed sole income sits around nine). It adjusts up for dependents and down for a partner who can cover essentials. The floor is two months even when adjustments push lower, because two months is the practical minimum to weather typical bad-luck patches.