Build an Emergency Fund — Savings Calculator

Financial advisors universally recommend having 3–6 months of expenses set aside before investing more aggressively. If your monthly expenses are £2,000, that's a target of £6,000–£12,000. Saving £300/month in a cash savings account at 4.5%, you'd reach £6,000 in about 19 months and £12,000 in about 37 months. The interest earned is modest for short time periods, but the discipline of building this buffer first means you won't need to sell investments at a loss during an unexpected job loss, car repair, or medical expense. Build the foundation, then invest the rest.

Illustrative estimate only — not a guarantee

~£11,540 after 3 years

£10,800 contributed + £740 interest

Based on a hypothetical constant return. Actual returns will vary.

By the CompoundWise Team · Updated April 2026

UK-based financial education · Not financial advice

1Calculate

2Understand

3Take action

Starting amount

£0£20k£200k

Monthly contribution

£0£1k£5k

Expected annual return

Time horizon

yrs

Final Balance

£11,540

After 3 years

You Put In

£10,800

Your own money

Interest Earned

£740

Earned passively

You could reach £11,540 — investing tax-free can help you get there

Your money vs compound growth6% from interest

ContributionsCompound interest

To reach £11,540, most UK investors use a Stocks & Shares ISA to invest £300/month tax-free.

Returns depend on the underlying investments and are not guaranteed.

Your £300/month fits within the £20,000 ISA allowance

All growth inside an ISA is tax-free. Start from as little as £1.

Capital at risk when investing

Thousands of UK investors use this calculator monthly

Invest from £1 (UK ISA) ↓

Growth Over Time

Quick Scenarios

Your Personalised Insights

Saving just £50 more per month would add £1,923 to your final balance — that's £1,800 invested for £1,923 extra.
5 more years would add £23,049 — nearly 200% more, showing how powerful time is.
At your current plan, you reach £10k in 3 years. That's a real milestone — and it compounds from there.
Your £300/month (£3,600/year) fits within the £20,000 ISA allowance — all growth could be tax-free.Invest it tax-free →
6% of your final balance is pure compound interest — money your money made.

Next Steps

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Month-by-Month Progress: Building Your Emergency Fund at £300 Per Month

At £300 per month into a cash savings account earning 4.5%, your emergency fund grows steadily. After month 6, you have roughly £1,840 — enough to cover one month of expenses for many households. By month 12, your balance reaches approximately £3,699, covering nearly two months. The £6,000 target (three months of expenses) arrives around month 19, and the full £12,000 (six months) around month 37. The interest earned is modest — approximately £270 over the full three years — but the real value is in the financial security the fund provides. Having this buffer in place means you can invest the rest of your income more aggressively, knowing that short-term emergencies will not force you to sell investments at a loss.

Where to Keep Your Emergency Fund in the UK

Your emergency fund needs to be instantly accessible, so a stocks and shares ISA is not appropriate here. The best options are easy-access cash savings accounts or cash ISAs paying competitive rates. As of recent rates, the best easy-access accounts offer between 4% and 5% AER. Marcus by Goldman Sachs, Chase, and Nationwide typically feature near the top of comparison tables. A cash ISA shelters the interest from tax, which matters if you are a higher-rate taxpayer or if your savings interest exceeds the personal savings allowance (£1,000 for basic-rate, £500 for higher-rate taxpayers). Keep the fund in a separate account from your everyday spending to avoid the temptation to dip into it for non-emergencies. Some people use a notice account (30 or 60 days) for part of the fund to earn a slightly higher rate.

How to Build Your Emergency Fund and Start Investing Simultaneously

Many people delay investing because they are still building their emergency fund, but you do not have to complete one before starting the other. A practical approach is to split your available savings: direct £200 per month toward your emergency fund and £100 per month into a stocks and shares ISA. Once the emergency fund reaches your target (say £6,000 in about 30 months at this pace), redirect the full £300 into investments. This way you begin your investing journey while building your safety net. The £100 per month invested during the emergency fund phase, at 7% returns, would grow to roughly £3,500 over those 30 months — a meaningful head start that gives compound interest extra time to work.

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Common questions

How many months of expenses should my emergency fund cover?

3 months is the minimum. 6 months is ideal if you're self-employed or have dependents. Keep it in an easy-access cash savings account, not invested in stocks.

Should I invest my emergency fund?

No. Emergency funds should be in instant-access cash savings. The purpose is availability, not growth. Once your emergency fund is built, invest everything beyond it.

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