Don’t bother building your emergency fund – just start investing

Conventional personal finance advice says you should build an emergency fund before you invest. The logic is sound. Cash gives you a safety net, protects you from shocks, and means you are not forced to sell investments when markets fall.

But in practice, this rule often has an unintended consequence. It stops people investing at all.

For many households, building an emergency fund takes a long time. Rent, childcare, energy bills and everyday costs mean spare cash is limited. What starts as a sensible first step quietly turns into a multi-year delay, during which no investing happens, and no experience is gained.

The problem is not the emergency fund itself. It is the all-or-nothing thinking that surrounds it.

A small shift in approach can make a meaningful difference. Rather than waiting until your emergency fund is “complete”, consider starting to invest with a very small amount alongside it. Even £10 is enough.

At that level, the financial risk is minimal. £10 will not undermine your resilience or derail your savings plan. But the behavioural impact can be significant.

Putting a small amount into an investment account allows you to see how investing actually works in real time. Prices move up and down. Sometimes markets fall sharply. Sometimes nothing happens at all. You learn, early and cheaply, that volatility is normal and that doing nothing is often the correct response.

This experience is hard to replicate through reading alone. Many people understand investing in theory but struggle emotionally when they see their money fluctuate. Learning these lessons with a small sum makes future decisions far easier.

Crucially, this approach does not replace building an emergency fund. Cash still plays an essential role in financial security. The difference is that investing no longer feels like a distant or intimidating step that only happens once everything else is “done”.
By the time the emergency fund is in place, investing is already familiar. Confidence is higher, hesitation is lower, and people are more likely to stay invested during periods of market uncertainty.

There is also a practical point to consider. When investing very small amounts, fees matter. Some platforms have minimum charges that can quickly erode a modest balance. Choosing a low-cost provider is particularly important at this stage.
For readers who want help getting started, there are free beginner guides available that walk through the basics, including how to choose a low-cost provider and avoid common early mistakes.

For most people, the biggest barrier to investing is not knowledge or access, but confidence. Starting small helps remove that barrier without compromising financial safety.
Think of it as an experiment rather than a commitment. A small sum, invested early, can deliver something far more valuable than short-term returns: understanding, experience, and the confidence to keep going.

An emergency fund remains important. But waiting for perfection can be costly in its own way. Starting small may be the difference between investing eventually and never starting at all.