May 20, 2020

If you have never heard of an emergency fund, but you want to start saving your money better or just being clever with your money.

Then read this post!

If you haven’t yet, read my How to Save Money blog post to get an idea…

An emergency fund is essentially a backup account that will help you save (if you don’t use it) and give you peace of mind in case of an emergency, so you don’t have to use your current account money.

If you find that every month you need to pay for something important you had forgotten about, your emergency fund will be there.

*Disclaimer… The emergency fund is your OWN money, it’s just in a separate ‘don’t touch’ account. It does not appear from another source…*

why you need an emergency fund

What is an Emergency Fund?

An emergency fund is a separate account you can create in your online banking.

Essentially a savings account.

(If you are confused with money and how to save, I recommend this book! – Money: A Users Guide by Laura Whateley)

It’s an account that you do not touch unless you really need too. Its not somewhere to place money you will spend every single month. Simply an extra pot of money, just in case you need it.

You would use an emergency fund to keep money separate throughout each month and use it as a back up if you need it. In case your car breaks down, you need to pay for an unexpected bill etc.

The aim is to set aside an amount each month.
Something that is doable for you, but also a good amount, for example I put £200 into this account at the start of each month.

Whatever is leftover from the last month is put into savings, or if I haven’t touched it, I leave it there for the next month.

If you spend this, then replace it next month, if you don’t you have two options.

  • Transfer remaining amount into actual savings
  • Keep the money in there and always start at £200 every month

The Benefits of an Emergency Fund

Having an emergency fund is beneficial for a number of reasons.

  • Peace of mind that you have extra money IF you need it
  • Easy way to save an extra £200 a month if you do not spend it
  • Money that is set aside for important things only
  • Learn some self-discipline with spending
  • A good way to start managing your money and tracking your finances

It is so simple, and so easy! There is no reason not to have one.

Building your Emergency Fund Account

It is super easy to set this up through your online banking.
If you head over to your online bank, you will be talked through the steps there on how to set up another account within your current account.

All you need to do is open up new savings accounts and label it ‘Emergency Fund’.

Once you have done this, transfer the amount you want to have in there. This could be extra money or money you would have in your current account.

Like I said previously, you will need a good amount in there since emergencies are usually expensive and more than just £10 here or there.

Once you have the money in there, you will be able to visualise what you have for that month. DO NOT TOUCH IT! Remember, this isn’t spare money to do your shopping with.

You will now also know in the back of your mind you have that extra money spare if you need it, and if you don’t spend it, you’ve made immediate savings.

How to use it

An emergency fund is super easy to use. You only need to use it when you REALLY need it. If you do not need to use it, then you don’t need to touch it!

If you find you need some of the money for an unexpected event. Then transfer the amount you need into your current account, and use it.

IMPORTANT- Once you have spent some of this money, do not replace it until you next get paid!
If you keep adding to your emergency fund, you defeat the object… You may as well just use your current account. This is why it is a good idea to put a larger amount in this fund.


Thank you for reading this post. I hope you have found it helpful, and that it inspires you to use your money more wisely.

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Leave a Reply

  1. Totally agree! Having an emergency fund is crucial. Car batteries die, washing machines break, unexpected doctor visits happen. Having the cash to pay for it helps keep a person out of debt. I would add: married people need to define together what constitutes an emergency. Does “Well I’ve wanted this new couch for years and it is on sale” count as a reason to use the emergency fund? (Not in our house. 😉 )

  2. This was a really good informative read. I really appreciated how well you broke down the information. I’ve been working on saving more so this was definitely a good read for me.

  3. Hey Charlotte! Your blog is so cute and aesthetic and i especially love this post! these are some really good ideas and going to create my fund now haha! Hope you have a nice day <3

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