Emergency savings pot: how much is enough?

At Darlington Building Society we’re on a mission to help people supercharge their savings and reap the rewards of better financial resilience.

Did you know that 14 million people have less than £100 in emergency savings? Would you have enough to cover these common unforeseen costs?

New car tyres (£50 – £220 per tyre)
Emergency boiler call-out charge (£60 – £100)
Replacement washing machine (£250 – £1,000)
Vet consultation and treatment (£50 – £300)

But how much is enough?

How much you can afford to put aside depends on your circumstances, but around three months’ worth of essential outgoings is a rough guide to the ideal financial buffer.

This would help to cover any of the above expenses, plus support you through a temporary reduction in or loss of income.

Having money stored away for emergencies provides a better financial outlook but also improves your mental wellbeing.

What if that feels out of reach?

If three months’ outgoings sounds beyond your current means, starting small is better than not starting at all. It’s never too late and no amount is too small to start with – many savings accounts can be opened with as little as £1.

There are so many different ways to save; it’s all about finding the way that works best for you:

Saving £20 a month will provide you with an emergency savings pot of £240 in a year, which will cover most of the common unforeseen expenses.
Saving £50 a month will give you £600 in a year.
The average UK salary is around £37,000. By putting 10% of your take-home salary per month into a savings account (approximately £250 per month), you’d have a financial buffer of £3,000 within a year.
If you don’t currently have the means to save regularly, you can put smaller amounts away as and when you can into a savings account and still earn interest whilst bolstering your financial resilience.

All of these methods of saving will help cover an emergency, and these pots would be worth even more if they were stored in a savings account earning interest, rather than sitting in a current account.

The right type of account

Over £300 billion is sitting in accounts not earning any interest so why not make your money work harder simply by making sure it’s in a savings account designed around what you need?

What works best for you will depend on your:

Goals – are you saving for an emergency pot, holiday fund or supporting life’s bigger milestones?
Access preferences – do you require immediate or unlimited access to your funds, or prefer to have a limited number of withdrawals on your emergency pot to ensure it’s used for its intended purpose?
Saving habits or frequency – have you got a lump sum to start with, or are you starting from scratch? Would you prefer to put a set monthly amount away, or build up your pot as and when you can?

There’s an account for all these scenarios!