Should you save three months or six?

Measure your emergency fund in months of essential spending, not months of salary. Essentials are the costs you would continue during a job loss: housing, basic food, utilities, transport, insurance and required debt payments. Holidays, investing and most subscriptions do not belong in this number.

Three months may be reasonable when income is stable, two earners share costs and insurance is strong. Aim closer to six months when income varies, one salary supports the household, you have dependants, health costs are uncertain or finding a similar role could take time. Freelancers may need a separate business buffer as well.

Build it in stages

  • First save enough for one common surprise, such as a repair or insurance excess.
  • Next reach one full month of essentials.
  • Continue towards your chosen three-to-six-month target after costly debt is controlled.

Keep this money accessible in an insured savings account. The job of an emergency fund is reliability, not maximum investment return.

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