Example: Emergency fund monthly method calculation
Here’s how much you might put away using the monthly method after breaking down your monthly expenses:
Category | Expenses |
---|---|
Rent | £1,000 |
Groceries | £450 |
Dining out | £350 |
Car loan | £200 |
Utilities | £150 |
Miscellaneous expenses | £150 |
Car insurance | £100 |
Cell phone bill | £75 |
Car fuel | £50 |
Subscriptions | £15 |
Total expenses | £2,540 |
If your goal is to have three months’ worth of expenses stored away, you’d need £7,620 (£2,540 x 3) in your emergency fund. For a more conservative savings plan of six months, you’d need £15,240 (£2,540 x 6).