Article 5 steps to help build an emergency fund

Having a healthy emergency fund can help cushion any financial blows that you might face during tricky times.

MoneyHelper, a government-backed website offering impartial financial advice, suggests that you should have three to six months of outgoings aside in case of emergencies.¹ But if the thought of saving right now feels out of the question – know that there are steps you can take (even small ones) that could help bring you some peace of mind.

Here are some tips to help you get started, or to give your current emergency fund a boost, so that you can be on the road to creating a stronger financial safety net.

Step 1: Set a clear target

Before you go straight to putting aside any spare money you have, take some time to work out how much you want to save, by when and what for. Then, write it down somewhere that you can easily see to keep you motivated. For example: 'I want to have saved £1,000 by March to be prepared for any future expenditure increases’.

To hit that goal, you could then set up a monthly standing order into an easy-access savings account (more on that to come).

Remember to budget and tailor whatever amount you choose to your own personal circumstances so that you’re not going into debt, or that it stops you from paying bills. Already gone over your budget and found that it’s not possible to save anything? Try not to be disheartened. You could always come back to these tips when you’re in a better position to do so.

Step 2: Work out where you’ll save your fund

In the case of an emergency, it’s important that you can access your money easily. When you’re looking at what type of savings account to open (or what you already have), bear this in mind.

Easy-access savings accounts typically let you add to them whenever you want (which can be ideal for habit building) and let you withdraw funds at any time.

Pay attention to the rate offered, check that it meets your expectations and look around for the best deals – the tax treatment or rate of interest payable often depends on your individual circumstances. If you’re unsure about anything – speak to the provider to get more information before making any decisions.

Step 3: Start saving by looking for quick ways to cut costs and make money

If you need to focus on adding to your pot, maintaining it, or are starting to build an emergency savings fund from scratch, here are a few things you could try: 

Review your spending in detail

Go through your bank statements to see exactly what you’re spending your money on and where you could make some cutbacks. 

Set a budget and stick to it

Setting yourself a daily, weekly, or monthly budget could help you stay on track. Not sure how to start? Our article on budgeting methods could help.

Cancel unused subscriptions

Make sure you really will benefit if you choose to do this, as there’s no point in cancelling services you still enjoy. Our financial wellbeing tool explores how you should keep in mind what brings you joy and purpose, all while managing your finances. 

Sell old books, clothing and homeware online

eBay is likely to be the go-to for many, but there are plenty of outlets to help you sell your unwanted bits and pieces. For clothing, these include Vinted and Depop – or for books, CDs, old tech and more, there’s always online outlets like Music Magpie and Ziffit.

Put a ban on spending for 2-3 days each week

Could you skip your morning coffee shop run, and bring a flask instead? You could consider putting the money you would have spent on non-essentials into a dedicated savings account instead.

Pay bills on time to avoid fees or interest

Pay particular attention to any mortgage or credit payments, as missing these could not only mean you pay more due to extra fees, but could damage your credit rating, too. If you’re struggling to meet payments on time, talk to your provider.  

Save what you earn from any side hustles  

Side hustles have become even more popular – with people putting their skills and passions to good use. If you’re thinking of starting your own side business, make sure to check with your employer if this is permitted within your contract. Be aware that any additional income can have tax implications, too. You can find out more by reading our article on 5 easy side hustles to boost your income.

Be more sustainable

Instead of using products once, you can rent items (like garden tools or even clothes for weddings, for example), refurbish or upcycle and recycle – all while potentially saving money.

Step 4: Remember your retirement

It might currently feel like a stretch to save towards your retirement, but keeping the long term in mind is important to make sure you have a sufficient income for when you come to retire.

Good financial wellbeing balances your short and long-term needs. But before you think about reducing or pause paying into your pension, read our article about the potential impact of it first.

Step 5: Know where to turn ‘just in case’ 

If you’ve been trying to build an emergency fund but find yourself in financial difficulty, know that you’re not alone and there are resources out there to help.

Whether it’s energy, food, pensions, or budgeting that is on your mind, head to our cost-of-living hub for details of where you can turn to for extra support.