Claim 6 of 22
Emergency fund: keep three to six months of expenses in cash
How much cash should a household keep for a shock?
Verdict
Holds with conditions
UK and Australian guidance supports a buffer of three months or more, and the US guide leaves the amount to the household. The claim holds when the amount is set by what counts as essential spending in the household itself, and it holds as a buffer because cash is money available at short notice. The surveys show a large share of households holding less than the target.
The cost, from the book's own figures. Taken as stated, the claim asks for £3,751 to £7,501 in cash at the UK essential floor, when 31 per cent of UK adults held less than £1,000 in 2024. At 2015–16 Australian prices it asks for A$10,257 to A$20,514, about five to ten times the A$2,000 that 21.7 per cent of Australian households could not raise within a week in 2025 (both comparisons calculated by this audit, the 31 per cent as 10 plus 21).
Made by: Ramsey (two titles), Lent, Craig, Pape.
Test it on your own numbers
- United States: CFPB, An essential guide to building an emergency fund (consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund), to set a target from your own essential monthly costs.
- United Kingdom: MoneyHelper, Emergency savings: how much is enough? (moneyhelper.org.uk/en/savings/types-of-savings/emergency-savings-how-much-is-enough), to set three to six months against your essential outgoings.
- Australia: Moneysmart, Save for an emergency fund (moneysmart.gov.au/saving/save-for-an-emergency-fund), to set a three-month target from your own expenses.
The full test, with every figure dated and sourced, is in chapter 6 of the book.