"Emergency fund" How much?

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I know it should be 3x the committed monthly outgoings (some even say it should be 3x monthly income) but there's genuinely no way we can save that much for the foreseeable future. Our current committed spending including repayments is of £4200 (or there abouts). We're thinking of then having £400 left for emergencies, £300 for unaccounted bills or top ops, and £500 for going out/general spending. Once we pay the credit cards (Apr 23), we'll be in a much better position of having other pots for Xmas, personal care, car fund, and holidays.

Bump

I have one months salary saved as an EF. Single mum of 3 who gets no maintenance, peace of mind if I lose my job/boiler explodes/washing machine packs up (all in the same month, no doubt 😆)

What might go wrong in your life and how much do you worry about it? Some folks would want enough for private heart surgery and others would be happy to have the means to buy a new washer at short notice. Do you want peace of mind more than you want a holiday/big Christmas/new car? If you have enough to make pondering these questions realistic, then you are better off than many.

So you've got £1200 current disposable income a month?
Pay off your credit cards asap and don't use them again.

We need to save for a car (both of ours are just surviving at this point). Maybe the boiler and the regular upkeep of a house.

The credit cards aren't accruing any interest, so the only rush is to pay them within the 0% term. We're very much on track.

Enough for private health care if needed. NHS waiting lists are horrendous here.

I have free healthcare in my birth country, so that's not an issue. That being said I do need to save for dental here.

We have a saving account for holiday savings and then another rainy day account which currently has 7k in, we don't let that go below 5k. We also have an emergency credit card, we also use this for large purchases for the added protection.

If you have 1200 left per month then pay off your credit card and then save as much as possible. The excess you have is very decent. I have always been careful with money even when I don’t need to be.

It used to be have six months outgoings saved when I was young.

What sort of job security, sickness pay and pension provision do you have ?

At 49 I was about to reach the peak of my career in a very secure job that I loved. At 50 I almost died and then spent a few years recovering, I was completely bedbound for a year, I am left with a chronic condition. I had full pay and then half pay for a year. I was medically retired and received my pension.

That was some curve ball to survive but the money situation at least was ok.

I say sa e what you can afford. We have about 1500 in savings which is half 1 month of our joint income. So not happy at all but we rinsed our savings to buy a house at the start of the year and fell pregnant just before Russia invaded the Ukraine when he extent of the coming recession wasn't clear. I'm shitting it but after all our bills are paid we have about 100 a month left over ( not including any spending money, presents or clothes ect). I could say that stretching ourselves for the house was toouch bit right now you can't rent anywhere in my city for less then my mortgage and most properties are at least 2-3 hundred more a month then our rent. If we have a big bill we're in serious trouble.

Having an emergency fund might be a recommendation/nice to have, but the statistics show that a very large percentage of people have little or no savings and certainly nowhere near 3 months of income or even outgoings.

You just have to do the best you can with what you have and be honest about what are necessities and what's optional so should really be lower priority than building an emergency fund.

Also the security of your income could be a consideration. If you have a very secure job with good sick pay, or can easily pay for essentials on one salary, you're a lot less likely to have to call on an emergency fund than if you aren't in this position.

We're trying to do it gradually so it doesn't feel like a burden, while also not paying interest. We're ok for retirement, right now that's the least of my worries.

Anything that means you won't have to reach for a credit card in an emergency situation and accrue more debt.

Dave Ramsey recommends £1000 or $1000. He's theory is pretty sound. Then work in clearing debt smallest first.

Eg boiler /washing-machine / car/ pet bills all have had me reaching for a credit card in the past.

The only thing that has made us accrue any debt has been my period of unemployment and setting up our home. If you split the two debts, only one will be left by the 1st of Oct, so we're certainly on track. We've always had enough disposable income to cover unexpected bills, but we've never been able to save.

Our theory is biggest cost that's likely to come as a surprise plus some float and then have that accessible to each person. So we have an account each with the the highest amount we think we're likely to need at short notice. That is also backed up by harder access savings but basically the point is breathing space.

Isn't the 400 for emergencies and 300 for unexpected bills savings??? Or is your budget not including predictable unexpected bills like an extra 100 to get the car through its MOT, and you're spending all that each month?

Dave Ramsey is good on budgeting. I keep 6 months of baseline expenses in an emergency fund. With 3 children at private school I also keep a year of tuition on the side.

You have capacity in your budget right now and inflation is going to start biting. Save as much as you can and pay down any debt you have. The next 2-3 years is going to be tough for many people.

Isn't the 400 for emergencies and 300 for unexpected bills savings??? Or is your budget not including predictable unexpected bills like an extra 100 to get the car through its MOT, and you're spending all that each month?

So the £400 monthly savings should cover the MOT (in my vision). The £300 would be for things like more petrol/groceries than expected.

If everything goes as planned, we'll have around £1200 of extra disposable income by July 23, which is when we'll rethink the budgets

We have nothing saved - and there's no way we can save at the moment with rising costs. What we do have is a number of credit cards with 0 balance that we can use in an emergency. It's not ideal but it's the only option right now.

An MOT isn't an emergency. It's an expected annual spend. £300 a month float is a lot.

Zero based budgets are the best so you budget EVERTHING To have nothing left as it's all stashed away in pots and saving and investments after month bills and spending.

But as before, step 0 on Dave Ramsey is a £1000 emergency fund so you never have to use a credit card again. Then step one is to pay of debt, step two is to build up 3/6 months salary. (IIRC). But don't overlap the steps. So £1000 emergency fund, then debt, then rain day savings.

have a look at the Martin Lewis budget sheet its good.

Even though it's 0% it's still a debt.

(I do use 0% credit cards but for budgeting holidays rather than needing the credit and air-miles to pay for holiday flights and could pay them today if needed to)

So for me it's £2010 in come
£500 a month nest egg
£1100 spending and direct debits
£400 Annual spends (mot insurance xmas birthdays weeks away Amazon prime /decorating /new phone/tech as needed)

I also do additional work shifts to pay for hols etc and some contracting.

The £1000 fund so I never have to use a credit card would have not helped me in the situation I was last year. We've never used a credit card for MOT, the plumber car bills, etc... We used them to keep us afloat while I was looking for a job. We haven't added to them for the past 10 months

But this is about now not last year?

Step 0 save £1000 starter emergency fund
Step 1 pay off debt starting with the smallest first
Step 3 save 3-6 months income/ expenditure for fully funded emergency fund.

I'm not what you are asking anymore.

I'm already on step 1...Step 0 would be 1st Nov, step 3 would take 30 months from January 23!