How big should your emergency fund be?
How much money to keep for the unexpected depending on your situation, how to work it out from your basic costs and how to get there bit by bit.
An emergency fund is money you keep for what you don’t expect: a car repair, a dentist’s bill, a month without income. It isn’t for holidays or treats; it’s what stops a surprise from turning into debt.
The reference figure
The most common recommendation, also given by Finanzas para todos (Spain’s securities regulator and central bank), is to hold three to six months of basic expenses. Basic expenses are the ones you’d still have to pay if you stopped earning:
- Housing: rent or mortgage.
- Basic utilities: electricity, water, gas.
- Food.
- Transport.
- Your debt repayments.
Fun, subscriptions and treats don’t count.
How to work out yours
- Add up one month of basic expenses.
- Multiply by 3 if your situation is stable, or by 6 if you’re more at risk.
For example, with €1,100 of basic expenses a month, your fund would be €3,300 to €6,600.
Three months or six?
Aim closer to six if:
- Your income varies or you’re self-employed.
- People depend on you.
- Only one income comes into your home.
With a stable job, two incomes and little debt, three months may be enough.
How to get there without stress
- Start with a small first target, such as €1,000. It already covers a lot of surprises.
- Set aside a fixed amount each month as soon as you’re paid.
- Keep it separate, in a different account from your everyday one: accessible if you need it, but not so handy you spend it without thinking.
- If you use it, top it back up before saving for other goals.
This guide is for information only and isn’t personalised financial advice.