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The original was posted on /r/ukpersonalfinance by /u/issyl0 on 2023-08-12 15:33:03.

EDIT: I read the wiki. (I had previously only paid attention to the flow chart.) Question answered (it’s the latter). Thanks!

Hi there,

I’m in a very fortunate position to be earning a lot for my age, including RSUs etc, I’ve landed a very good tech job.

I’ve got £20k in an ISA right now. I used to be scared of ISAs “locking my money away” (financial insecurity, woo), but I’m in the tax bracket where I have to pay tax on interest so it was sensible to do. Thanks to this subreddit for de-mystifying a bunch of stuff.

I currently consider that ISA my emergency fund (it’s flexible). But I was wondering if the emergency fund was supposed to be “six months income” or six months “cut a bunch of luxuries and just be able to keep a roof over your head and food on the table”?

(Example numbers: I earn £2000 a month post-tax, do I need £12k in the ISA, or is it £1000 a month necessities, £6k in the ISA?)

Thanks!

  • @[email protected]
    1•1 year ago

    I did some calculations for myself, a few months ago, when I first started reading the ukpersonalfinance pages.

    In my case, I’m putting quite a bit of my monthly income into savings.

    My emergency fund is there to take care of adverse situations, such as if I lost my job.

    So I would class one month’s emergency fund as the amount I need to carry on living as I am but without making investments into ISA, savings accounts, overpayment of mortgage etc. Because I wouldn’t be doing those things if I was out of a job and looking for a new one.