Emergency Fund Calculator 2026/27

What an emergency fund is

An emergency fund is a cash reserve kept for unexpected but essential costs, such as losing your job, illness, major home repairs or urgent travel. It means you don't have to take on expensive debt or sell investments at a bad time when something goes wrong.

How much to keep

There is no single right number. A cautious approach might hold 12 to 18 months of essentials, while someone with a stable income and low fixed costs may choose 2 to 6 months.

Where to keep it

Emergency funds are usually best kept in cash or close to cash so the money is available quickly. Common choices are easy-access savings accounts, money market funds and premium bonds.

Money market funds

Money market funds are low-volatility funds that invest in short-term, high-quality, cash-like holdings. They aim to protect your money while paying more interest than some current accounts. Read more in our guide: What are money market funds?

Premium bonds

Premium bonds are an NS&I savings product backed by the UK government. Instead of interest, you are entered into a monthly prize draw. You can take your money out when you need it, but returns aren't guaranteed because they depend on winning prizes. You can hold up to £50,000.

Pros and cons

• Pros: more financial resilience, less stress, and less need for high-interest borrowing.
• Cons: lower long-term returns than investing, and inflation can erode its value.