Without an emergency fund, unexpected costs can derail your financial goals. An emergency can turn into an ongoing problem if it forces you to borrow money at high interest rates. This can make it extremely hard to get ahead until that debt is repaid, and another emergency in the meantime will only make the situation worse.

But how much money should you have in your emergency fund? The minimum recommended amount according to Sorted is $1,000. That will cover minor repairs on your car or fridge, for instance, or an electrician or plumber to fix a small problem. With that money in the bank, you can consider using other income to repay consumer debt like your credit card or buy now, pay later account.

Ideally, an emergency fund will be enough to pay for at least three months of outgoings: your rent, mortgage, power, water, food and any other essentials. Think realistically about how much you would need to survive for a month if you lost your job. For an individual, $10,000 to $20,000 is a great starting point.

Super conservative advisers will aim for six months of expenses. A larger emergency fund will give you more wriggle room and, if you’re job-hunting, lets you take longer to find the right role. Great if you can manage it, but six months of expenses is going to be a big ask for many households, especially families.

Any emergency fund is better than none, so start with $1,000 and build from there. The money needs to be available immediately, at any time. A high-interest savings account is probably the ideal place to keep your emergency cash. Once you have built up your emergency fund, any extra money can go towards investments.