What do you do if the rain floods through your roof?

For some things, only cash will do
Maybe your insurance company will behave as in the ads. But sometimes they don't.

Maybe your emergency medical treatment will be covered by the NHS. Well it will be, eventually.

Maybe your children will never get into trouble.

Whatever, every family should have a cash cushion for emergencies.

What do you mean by cash?
Any money you can access quickly and reliably.

How quick and how reliable? That's for you to decide. Some like to take a few chances with speed or reliability to earn a bit of extra interest. Some don't. It's a personal thing - like so much in family finances.

How much cushion?
The standard recommendation is at least three months' earnings. The right answer is 'whatever you feel comfortable with'.

Why not just borrow when you need it?
Actually this is a good question:

• It is stupid to have expensive debt and a cash cushion. Much better to use one to pay off the other. Then, when you have a cash crisis use your debt line - expensive though it may be.
• But make sure your access to debt is secure. Sometimes credit can just dry up - as Northern Rock discovered.
• ...and none of this is a substitute for being debt free and having a cash cushion.