Discussion
Dear Pistonheads,
- How many months of expenses do you keep for emergency fund?
- How many months do you thinks is best?
- How much do you think should be kept relative to short term debt (cc) or long term (car debt)?
My situation is following, 3 dependants, im the one earning. Private sector job.
Ease help, seems plenty of financially literate people here
- How many months of expenses do you keep for emergency fund?
- How many months do you thinks is best?
- How much do you think should be kept relative to short term debt (cc) or long term (car debt)?
My situation is following, 3 dependants, im the one earning. Private sector job.
Ease help, seems plenty of financially literate people here
The best way to think about it is in terms of how long it would take you to get another job at an acceptable salary (and whether you’d have any other expenses, such as relocation, arise as a result of doing so).
If you have a very specialist job with few other similar roles anywhere in the country then you need a much larger reserve than if you do a very general role that is in constant widespread demand.
Similar applies with very senior jobs where it can take 12+ months to find anything (even if people are willing to drop a long way down the corporate ladder to get cash coming in, firms are often reluctant to hire).
If you have a very specialist job with few other similar roles anywhere in the country then you need a much larger reserve than if you do a very general role that is in constant widespread demand.
Similar applies with very senior jobs where it can take 12+ months to find anything (even if people are willing to drop a long way down the corporate ladder to get cash coming in, firms are often reluctant to hire).
I'd say three months minimum, but ideally six months.
It depends a lot on your personal circumstances, though. For instance, if you lost your job how quickly could you get another one (even as a temp)? Would you be eligible for government assistance e.g. Jobseeker's Allowance?
What's your current emergency fund looking like, in terms of months?
It depends a lot on your personal circumstances, though. For instance, if you lost your job how quickly could you get another one (even as a temp)? Would you be eligible for government assistance e.g. Jobseeker's Allowance?
What's your current emergency fund looking like, in terms of months?
I've got 35k in PBs. Which if we cut our cloth could cover us for maybe 2 years. My job is secure enough, I'd prefer to have funds to replace our roof if required. Everyone's outlook/circumstances are different
Then it'd be onto selling down investments in ISAs, so maybe a couple more years, but then I'll be working to the grave.
Then it'd be onto selling down investments in ISAs, so maybe a couple more years, but then I'll be working to the grave.
Simpo Two said:
Blue_star said:
- How many months of expenses do you keep for emergency fund?
- How many months do you thinks is best?
Depends how long you think it would take to find a new job if you lost yours tomorrow.- How many months do you thinks is best?
Very personal really as depends on your circs entirely.
You’re in a what would appear a safe job (you of course will know more yourself).
Mrs Shnozz is a uni lecturer so in a ‘safe’ job as much as one can be. As. PhD Dr she’s also modestly paid for her education so if s
t hit the fan in academia could walk into a role outside probably at twice the money.
By contrast I’m self employed in legal field so work can fluctuate but AI is seeing a big increase in work for me. As I’m S/E I also can flex my income as and when and my savings are largely kept in my business account rather than a personal one which carries little cushion or I would just pay tax on extracting it to hold it outside of the business.
We don’t have short debt of CCs and no car loans etc so minimal debt exposure to have to worry about covering so risks of not holding a reserve pot are diminished.
It entirely depends on other factors so can’t see a one size fits all being much use in these models.
You’re in a what would appear a safe job (you of course will know more yourself).
Mrs Shnozz is a uni lecturer so in a ‘safe’ job as much as one can be. As. PhD Dr she’s also modestly paid for her education so if s
t hit the fan in academia could walk into a role outside probably at twice the money.By contrast I’m self employed in legal field so work can fluctuate but AI is seeing a big increase in work for me. As I’m S/E I also can flex my income as and when and my savings are largely kept in my business account rather than a personal one which carries little cushion or I would just pay tax on extracting it to hold it outside of the business.
We don’t have short debt of CCs and no car loans etc so minimal debt exposure to have to worry about covering so risks of not holding a reserve pot are diminished.
It entirely depends on other factors so can’t see a one size fits all being much use in these models.
I have always tried to keep our outgoings at a level where two minimum wage jobs could keep us going without tapping into savings. I think that’s about £3600 a month these days, so probably still doable.
So, for me, keeping outgoings as low as possible is as important as the emergency fund itself. I don’t have an emergency fund as such but I think for most people 6-12 months is sensible, especially given the state of the economy.
So, for me, keeping outgoings as low as possible is as important as the emergency fund itself. I don’t have an emergency fund as such but I think for most people 6-12 months is sensible, especially given the state of the economy.
Shnozz said:
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By contrast I m self employed in legal field so work can fluctuate but AI is seeing a big increase in work for me.
Slightly off topic but that's interesting everyone only speaks about AI reducing work. Are you able to say how AI is creating more work for you? By contrast I m self employed in legal field so work can fluctuate but AI is seeing a big increase in work for me.
Back on topic. Personally I'd go for 3 months minimum in cash, with credit card in reserve. As someone said keeping monthly outgoings low and having no debt helps take away the stress.
Blue_star said:
Dear Pistonheads,
- How many months of expenses do you keep for emergency fund?
- How many months do you thinks is best?
- How much do you think should be kept relative to short term debt (cc) or long term (car debt)?
My situation is following, 3 dependants, im the one earning. Private sector job.
Ease help, seems plenty of financially literate people here
I think the amount should vary, depending on how "fixed" your monthly outgoings are and what other "incomings" you have.- How many months of expenses do you keep for emergency fund?
- How many months do you thinks is best?
- How much do you think should be kept relative to short term debt (cc) or long term (car debt)?
My situation is following, 3 dependants, im the one earning. Private sector job.
Ease help, seems plenty of financially literate people here
For example a couple having £8k joint net income pcm with £2k outgoings probably need a lower financial cushion (in percentage terms) than somebody on £2k net income and £1.9k outgoings.
In the latter situation I'd be wanting a minimum of 6 months in easy access savings.
Blue_star said:
Simpo Two said:
Blue_star said:
- How many months of expenses do you keep for emergency fund?
- How many months do you thinks is best?
Depends how long you think it would take to find a new job if you lost yours tomorrow.- How many months do you thinks is best?
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