An emergency fund is money you put aside that acts as a ‘safety net’. It can be used to cover the financial shock of suddenly losing a job, unexpected bill rises or if the pesky boiler breaks.

How much you need to save, and what you consider an ‘emergency’ is down to you, but saving an emergency fund can help you avoid borrowing money, payday loans or making tough financial decisions in those stressful moments.

How much should an emergency fund be?

An emergency fund should be enough to cover your monthly expenses for three to six months. You can work this out by adding up your bills (such as rent, gas & electricity, phone etc.) and how much you spend on essentials like groceries and petrol. Then, simply multiply that figure by three.

For example, if your monthly bills total £850 and you roughly spend £300 a month on groceries, you take the total of £1,150 multiply that by 3… making your emergency fund target £3,450.

Remember, this is just a target so don’t panic if your savings are nowhere near this figure. You don’t need to start with a big lump sum, the important thing is you just start!

By putting away a small percentage of your income each month, you will quickly see your emergency fund build up. So, when the washing machine is on the blink, you can rest easy that you have money in your savings to cover it. And once you purchase, you continue building your fund again.

Setting up a ‘savings goal’ via Darlingtonline is a simple way to track your savings, and to see how long it will take you to build up your fund. Simply pop in how long you want to save for and how much you can afford to save each month, and we’ll tell you if you’re goal is achievable and help you track your progress.

How do I avoid ‘dipping in’?

It can be tempting to see that figure in your savings and splurge, or even to stop adding to it.

A great way to avoid dipping into your emergency fund is to keep it separate from your usual savings and your main current account. Keeping it out the way avoids accidental spending and removes temptation. Some people even save with an entirely different bank or building society, simply so they cannot see their fund on a daily basis in the banking app. If you do find yourself tempted to take a couple of quid out the fund, ask yourself ‘is this an emergency?’ or ‘is this a want or a need?’, this should help you avoid the unnecessary spending.

How do I start?

Consider it just another bill. You can set this up as a standing order for the day you get paid, to save automatically. This should help change your mindset, and help you avoid spending it.

Need some help?

You can make an appointment at your local branch to open a savings account, or book in a ‘savings MOT’ to talk all things finances. Find your local branch here.