Saving for a rainy day - how to build an emergency fund in 2026

Life’s full of surprises; boiler packs in, car fails its MOT, or your job takes a wobble. That’s where an emergency fund comes in. Having money set aside for unexpected expenses means you can stick to your monthly budget and avoid ending up in debt in 2026.

How big should your emergency fund be

You’ll often hear the same advice: you need 3-6 months of essential expenses saved up. That sounds lovely, but for people living month to month, it’s not always realistic. It can put you off saving altogether because it seems like an impossible goal to achieve.

Instead, it’s best to start small. Even £500 or £1,000 can make a big difference when life happens. A smaller goal is still a win and helps you stick to your budget too.

A quick reality check if you think saving “just £1,000” for emergencies is pointless – around 1 in 10 people in the UK have no savings at all, while 21% have less than £1,000 tucked away according to the FCA. So, even a small emergency pot puts you ahead of the game.

How to set a manageable goal

Setting a manageable goal is working out how much you need to save and how much you can realistically save. Here’s how to get started:

• Work out your essentials: rent/mortgage, bills, food, transport.
• Pick a mini target: one month’s essentials, or even £500 to begin with.
• Break it down: if £500 feels doable, saving £50 a week gets you there in 10 weeks. Much less scary than “six months’ wages.”
• Use SmartBudget: if you’re a thinkmoney Smart or SmartPlus customer, use SmartBudget to ensure you’re paying your bills on time and see a three-month overview of your spending money so you know exactly how much you can put aside in savings.

How to start building your emergency pot

Once you have a goal in mind, you’ll need to start putting money away to make it happen. That can be easier said than done, particularly if you’re living month to month. Here are some ways to get started.

1. Pay yourself first

This is the golden rule. Before you pay a single bill or buy a loaf of bread, move a set amount into your savings. Even if it’s £10, it counts. Treat it like paying your future self because that’s exactly what you’re doing.

Automating this with a standing order helps, but the mindset matters most: savings aren’t an afterthought, they’re the first thought.

2. Cut one regular cost

Pick something you pay for every month and ditch it or swap it for a cheaper option. Could be that streaming service you barely use, the gym membership gathering dust, or even branded groceries. Redirect that money straight into your emergency fund. If you save £20 a month, that’s £240 a year without feeling the pinch.

3. Use windfalls wisely

Birthday money, tax refunds, work bonuses—don’t blow them on impulse buys. Stick at least half into your emergency fund. It’s the easiest way to boost your savings without touching your day-to-day budget.

4. Try a savings challenge

Want to make saving fun? Why not try a savings challenge this year. We just put together a round up of 7 popular savings challenges to try in 2026. Pick one, stick to it, and you could end the year with several hundred pounds of savings (at least).

5. Celebrate milestones

Hit £100? £500? £1,000? Celebrate. You’ve done something many people struggle with, you’ve put money aside in a cost-of-living crisis. You could treat yourself to your favourite coffee, have a movie night in, or go out for a drink with a friend. Whatever you feel is appropriate.

What if I don’t manage to hit my emergency fund goal?

Life happens. But, ultimately, any amount you save is a success. That little cushion means breathing room next time life throws an emergency your way.

It’s the difference between calmly sorting the problem and having to choose between paying for a repair or doing your food shop, or worse, falling behind on bills.

The bottom line is, do what you can, don’t worry if things don’t go to plan, and keep going after a setback.