Dave Ramsey says (yes I am mentioning him again) that the first of his Baby Steps is to have an emergency fund of $1,000 before you start to pay off your debts. I was thinking that since I live in the UK, I should just convert it to £1,000 then I got thinking. How much of an emergency fund do I really need?
I live in a flat in which the heating and hot water is maintained by the building so no chance of the boiler breaking down and costing me a penny. I don’t have a car so no worries about it breaking down. I am covered by the wonderful National Insurance so if I need medical care I will be able to get it.
The only things that really worry me if bad luck comes a knocking, are my cats health, as vet bills can be expensive and if I can’t work if I get ill. Does that warrant a £1000 emergency fund? I don’t think a £1,000 emergency fund would be of much help if I really got ill. So, should I have a smaller emergency fund and put more money towards my debts?
What are your thoughts on this possible financial minefield? Do you think a girl can get by with a few hundred pounds in an emergency fund?