I prepared a short and simple breakdown of these funds to address the most common confusion:
So, what’s the difference then?
Funds are set apart by their size and purpose.
A Rainy Day Fund is for those unexpected, smaller expenses like home repairs, moving costs, or medical bills. It usually covers about 1-3 months of your living expenses.
On the other hand, an Emergency Fund is for major life changes, like a job loss or divorce, which could seriously impact your finances. This one typically covers 6-12 months of living expenses.
How much? Quick example:
If you earn £35k, your rainy day fund should be £6k, an emergency fund should be £18k
A good idea for both funds is to set a target and let them grow with interest.
The best part is that the Emma app has you covered with unlimited savings pots for all your goals.
Are you currently saving towards these funds, or are you all set? Share your thoughts!