An emergency fund or rainy day fund can help you weather those tough financial times. The pandemic has certainly highlighted the importance of having some money tucked away. But how do you know when you have enough?
In an effort to encourage financial fitness in its customers, HSBC did a survey and found that 80% of respondents had an emergency fund. While this is great news, it doesn’t answer the question of how much is enough.
The three-month rule of thumb
It’s likely that you’ve heard the three-month rule in terms of setting up your emergency savings. Essentially, this means having an emergency fund big enough to cover three months’ of living expenses. Some experts push that to six months for those whose income isn’t stable, such as commission-earners, seasonal workers and the self-employed.
So if your living expenses come in at £1,000 per month, you should ideally have … Read more