Free topic in the app · 103 lessons

Saving money: emergency funds, sinking funds and where to keep cash

The saving lessons cover the order to do things in: a small cushion first, then expensive debt, then a full emergency fund, then investing. They also cover how to size each pot and where cash earns its keep.

Four of them are below with their quizzes. The emergency fund and savings goal calculators on this site work out the numbers for your own situation.

Lesson 11m 20s read · level 1

Starter emergency fund: minimum viable cushion

$1,300 in a separate account. Not three months expenses yet. Just $1,300.

Starter target$650-$1,300

Time to build1-3 months

Before chasing a full 3-6 month emergency fund, build a starter cushion of $650-$1,300 in a separate account. Enough to absorb a small surprise (broken phone, urgent train, vet bill) without reaching for a credit card. Aim for this first, then attack debt or build the bigger fund.

Try this Open a separate account today. Hit $1,300 before any other money goal.

Quick check

Why start with a $1,300 cushion instead of jumping to a full 3-6 month emergency fund?

Lesson 20m 55s read · level 2

Sinking funds: paying for the future you can see

Christmas costs the same every year. So why is it always a shock?

RuleSave monthly, spend yearly

A sinking fund is a savings pot you contribute to monthly for a foreseeable, infrequent expense: insurance renewal, Christmas, holiday, car service. The trick is to plan for known shocks before they arrive.

Try this List your top 3 yearly expenses. Divide by 12. That's your monthly sink.

Quick check

What's the point of a sinking fund?

Lesson 31m 50s read · level 2

Emergency fund: 3 months or 6?

Single income + dependents: 6 months. Dual income, stable jobs: 3 months. Edges matter.

Dual-income stable3 months

Single + dependents6+ months

The 3-6 month emergency fund range isn't arbitrary. Where you fall depends on income stability, dependents, debt load, and how fast you could replace lost income. Stable dual-income couple with no kids: 3 months. Single income with dependents in a volatile field: 6+ months.

Try this Match your fund to your actual risk profile. 3-6 months isn't one answer.

Quick check

Which profile most needs a 6+ month emergency fund (vs 3 months)?

Lesson 41m 30s read · level 2

The order of saving operations

Starter cushion. Kill high-APR debt. Full emergency fund. Match the pension. Then invest.

Highest priorityStarter fund

Last stepPrepay mortgage

Most financial advice agrees on a rough sequence: build a tiny safety net, then kill the most expensive debt, then build the proper emergency fund, then capture any employer pension match. Skipping a step backward (investing while carrying credit card debt) is mathematically dumb.

Try this Identify your current step. Don't skip ahead until each prior step is solid.

Quick check

You have a $3,900 credit card balance at 22% APR and $650 in savings. What's the right next move?