The FCA’s latest Financial Lives Survey found that around one in three UK adults had less than £1,000 in cash savings in 2024.

The research, published in May 2025, found 9% of adults could cover their living expenses for less than a week, compared with 8% in 2022. Lone parents, full time carers, renters and those who have experienced a relationship breakdown in the last 12 months were some of the groups most likely to be unable to cover their expenses for more than a week.

Read more: Average Household Savings & Wealth UK

Meanwhile 39% of adults have unsecured debts, owing on average £2,500. (Note: for reference, our research separately put the average household credit card debt at £2,601 heading into 2026.)

Overall, 24% of UK adults (13.1 million) had low financial resilience in May 2024, meaning they have missed payments, are struggling to keep up with commitments, or lack sufficient savings to cope with financial shocks.

How much should I save for emergencies?

Most financial experts recommend having an emergency fund that covers three to six months’ essential expenses. This safety net should be enough to cover essentials such as rent or mortgage payments, utilities, food, insurance, and debt repayments if your income unexpectedly stops or you face a major bill.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: "When it comes to savings, there’s a fairly simple rule of thumb. You should have enough cash to cover three to six months’ worth of essential expenses as emergency savings while you’re working.

“If you’re retired, you should think about holding more – one to three years’ is sensible.

“Of course, to do this you need to work out what counts as an essential expense for your household. You then need to calculate how much you spend on the essentials. And finally you have to decide where on the spectrum of three to six months or one to three years you should fall.”

Households with a single income, unstable employment, or self-employment may need larger buffers. In these cases, a fund covering six to twelve months’ expenses offers extra protection.

Lewis Broadie, NatWest Savings Expert, said: “Customers who start building a savings safety net tell us that the best way to do that is by setting a goal, which is personal to them, and committing to that goal by putting away a small amount each month.

“Doing this when you are paid, and taking the approach of saving little and often, means it all adds up quickly - resulting in less worry and more confidence for whatever the future holds."

How to build an emergency fund

An emergency fund is money set aside for unexpected costs or a drop in income, kept separate from savings for planned spending.

The FCA found 90% of the almost 18,000 people it questioned had cash savings, but just 71% held their savings in some sort of product. And only 35% had investments.

The average was also £5,000-£6,000, but this is unlikely to cover six months of living expenses.

Common ways people build an emergency fund include:

• Automatic transfers: a standing order on payday moves money to savings before it's spent.

• Reviewing subscriptions and regular spending.

• Redirect existing savings: If you’re already investing but lack emergency cash, consider temporarily diverting funds into your emergency pot.

• Round-up features: some banking apps round up card payments and move the difference to savings.

• Directing part of a pay rise or bonus to savings.

• Selling unused items through resale platforms.

How to compare savings accounts?

Building an emergency fund takes time, but where you save the money can make a big difference. While you want your savings to grow with interest, it’s also important to have access to your cash when you need it.

Read more here: Savings Accounts Guide

Here’s a quick look at some common options:

1. Regular savings account

Regular savings accounts are designed for fixed monthly deposits.

Regular savers often pay some of the higher rates available, but usually limit how much can be paid in each month.

If you're putting the same amount away each month, you can work out your effective return by adding up how much you'll have saved after 12 months, and then divide the interest rate in half.

Why? When you save a lump sum, you earn interest on the full amount for the whole year. But with a regular savings account, you're drip-feeding money in each month. That means:

Your first payment earns interest for 12 months.

Your second payment earns interest for 11 months.

Your third payment earns interest for 10 months.

And so on, until your last payment only earns interest for one month.

So, on average, your money is only in the account for around half the year. That’s why, as a rough rule of thumb, you can take the advertised annual interest rate (AER), divide it by two, and apply that to your total savings after 12 months to estimate your effective return.

Read more: How regular savings accounts work

2. Instant access savings accounts

Instant access makes these accounts a common choice for emergency funds, though rates are often lower than on notice or fixed accounts.

While instant access accounts tend to offer lower interest rates than fixed or notice accounts, the flexibility is worth it for money you may need at short notice. Many deals are available online or via app-based banks, so it’s worth shopping around for a competitive rate.

3. Notice savings account

Notice accounts often pay more than instant-access accounts, though not always; and you must give advance notice before withdrawing your money - often 30, 60 or 90 days. This can work well if you're building your fund but don’t need instant access to every penny.

The delay in withdrawals can actually help prevent you dipping into your emergency fund unnecessarily, while still keeping the money reasonably accessible for genuine emergencies. Check the notice period and whether early withdrawal is allowed or penalised.

4. Fixed savings account

A fixed savings account (or fixed-rate bond) locks your money away for a set period, typically one year or even longer, in exchange for a guaranteed interest rate. These often offer the highest rates but aren’t usually suitable for emergency funds because you may not be able to access the money quickly if needed.

If your emergency fund is large enough, you might choose to keep part of it in a fixed account to maximise returns, while keeping the rest in easy-access or notice accounts for flexibility.

Read more:

• What is a Lifetime ISA? How it works, best providers and penalties

• Savings Accounts Guide

• Bank Accounts Guide

• Average Household Savings & Wealth UK