Emergency Fund Calculator
Calculate how much cash reserve you need to survive slow periods, unexpected costs, and job cancellations without panic or emergency loans.
Monthly Essential Expenses
What you need to cover personal bills
Current Situation
How much is in your emergency fund now?
Your Emergency Fund Target
6 Month Emergency Fund
£19800
6 × £3300 expenses
Savings Plan to Reach Target
Target reached in 54 months
Target reached in 27 months ⚡
Coverage Levels
🚨 Priority: Build Emergency Fund
You're exposed to cash flow emergencies. Start with 3 months (£9900) ASAP. 10% of all revenue goes here first.
🏦 Separate Account
Keep in instant-access business saver. NOT your current account (you'll spend it).
💰 10% Rule
Transfer 10% of every payment to emergency fund BEFORE paying anything else.
📅 Review Quarterly
Expenses change. Recalculate every 3 months and adjust target if needed.
Why Every Trade Business Needs an Emergency Fund
December is slow. A big customer doesn't pay. Your van breaks down. A job gets cancelled last minute. Without an emergency fund, these normal business events become financial disasters that force you into expensive overdrafts or payday loans.
🚨 The Christmas Cash Crisis
A plumber had £800 in the bank in December. Revenue dropped 60% (normal for winter). Fixed costs didn't. He needed a £3,000 payday loan at 49% APR to pay rent and insurance.
Interest cost him £1,470. An emergency fund would have cost him £0. This is why 63% of trade businesses fail in year 1.
How Much Emergency Fund Do You Need?
Standard Recommendations:
3 Months (Minimum)
Covers typical slow period. Better than nothing but still risky.
6 Months (Recommended)
Industry standard. Survives winter slow period plus unexpected costs.
12 Months (Ideal)
Sleep-easy money. Handles recession, major equipment failure, serious injury.
What Counts as "Expenses" for Emergency Fund?
Your emergency fund should cover ALL essential costs you can't avoid:
✅ Include These
- • Your minimum salary: What you need to live
- • Van costs: Finance, insurance, tax
- • Business insurance: Liability, professional indemnity
- • Rent/storage: If you pay for workspace
- • Essential software: Accounting, job management
- • Loan repayments: Business loans, equipment finance
- • HMRC payments: Tax, VAT, PAYE if you have staff
- • Phone/internet: Business line
❌ Don't Include These
- • Materials: Only buy when you have jobs
- • Subcontractors: Variable cost, scales with work
- • Marketing: Pause if revenue drops
- • Fuel: Less work = less driving
- • Bonuses: Nice to have, not essential
- • Tool upgrades: Can wait
- • Van upgrades: Luxury, not survival
How to Build Your Emergency Fund (Even on Tight Margins)
1. Pay Yourself First (10% Rule)
Transfer 10% of every payment received straight to your emergency fund account. Before paying suppliers. Before paying yourself.
Example: £500 job → £50 to emergency fund → £450 available for expenses
2. Good Month = Double Contribution
When you have a £5k+ month, put 20% toward emergency fund instead of 10%. Build the buffer while cash is flowing.
3. Tax Refund Goes Straight to Fund
If you get a tax refund (CIS rebate, overpaid self-assessment), don't spend it. Emergency fund.
4. Separate Account (Instant Access)
Keep emergency fund in a separate business savings account. NOT your current account (you'll spend it). NOT a fixed-term account (you can't access it).
Recommended: Marcus, Chase, or Moneybox business saver (instant access, decent interest)
5. Once Full, Start Investment Fund
Once you hit 6-12 months emergency fund, redirect the 10% to business growth: better tools, van upgrade, hiring help.
When to Use Your Emergency Fund
✅ Legitimate Emergencies
- • Revenue drops below break-even
- • Major equipment breakdown (van, tools)
- • Customer bankruptcy (they can't pay you)
- • Serious injury preventing work
- • Unexpected tax bill
- • Winter slow period cash gap
- • Insurance claim denied
❌ Not Emergencies
- • Van upgrade (want, not need)
- • Holiday
- • New tools that aren't broken
- • Buying stock for "good deal"
- • Personal expenses
- • Covering poor pricing (that's a business problem)
- • Buying materials before job confirmed
💡 The Replenishment Rule
If you dip into your emergency fund, replenishing it becomes Priority #1. Go back to 10% (or 20%) of all revenue until you're back to target.
Don't treat it like a slush fund. Emergency fund is insurance, not income.
Real-World Emergency Fund Targets by Trade
| Trade | Monthly Costs | 3 Months | 6 Months |
|---|---|---|---|
| Solo Plumber | £3,200 | £9,600 | £19,200 |
| Electrician | £3,500 | £10,500 | £21,000 |
| Builder (2 staff) | £8,500 | £25,500 | £51,000 |
| Cleaning Company | £4,200 | £12,600 | £25,200 |
Common Mistakes with Emergency Funds
❌ Keeping It in Your Current Account
You'll spend it. Human nature. Separate account = mental barrier = money actually there when you need it.
❌ Treating It as Growth Capital
"I'll use it to buy stock and make profit." No. That's speculation. Emergency fund is defense, not offense.
❌ Waiting Until You "Have Enough"
Start with £50. Then £100. Then £500. Build momentum. Waiting for the "perfect time" means it never happens.
❌ Including It in "Available Cash"
When you check your bank balance, mentally subtract the emergency fund. It's not available. It's insurance.
Related Calculators
Break-Even Calculator
Work out minimum jobs needed to cover costs
Tax Calculator
Estimate your annual tax bill to budget for
Helpful Resources
Build and Protect Your Emergency Fund
Use this calculator to pick a realistic target and review your buffer regularly so a slow month or a surprise bill doesn't knock you off course.
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