The current news about the spread and impact of Covid-19, as well as the damage from climate change and more severe weather in the UK, makes thinking about our ability to cope with dramatic changes in our daily lives even more pressing.
The general advice is that we should each try to build an ‘emergency fund’ (or ‘nest egg’ if you are feeling more confident) that is roughly equal to 3 months of your basic expenses. The idea is that should you be unable to work, or need to pay urgent unexpected bills, then you have some cash to draw upon without needing to arrange credit.
To be useful it needs to be easy and quick to access, but also safe - and ideally not be losing value.
The point of this fund is that it is separate from the money you are investing for the future, and should not be earmarked for specific projects - this is for emergencies.
It is not easy to build such a fund, and may take some time, so the earlier you start, the better.
I’m curious (this won’t be scientific research, only for conversation) about how this community approaches this.
- I have no specific emergency savings
- I have started to save, but am far from my goal
- I am saving, and confident I will have this amount soon
- I already have a fund, and am now saving and investing for other goals
- I don’t feel I need this fund. I use my savings in other ways as there will be other options if I ever need them
For those who have, or are building, their emergency fund, where do you keep it?
(if it is cash under a mattress, please don’t mention this!)
How did you feel when you realised you had achieved this target?