Debt management plans and saving money

Use the Help to Save scheme

Help to Save is a government backed savings account.

It helps people on low incomes to save money.

It boosts your savings by 50p for every £1 you save.

Who can open a Help to Save account?

You can open a Help to Save account if you are living in the UK and:

• Entitled to or receiving Working Tax Credit or Child Tax Credit payment, or
• Claiming Universal Credit and your household income in your last monthly assessment period was £542.88 or more
• Your Universal Credit payments do not count as part of your household income

You can keep using the savings account if you stop claiming benefits.

You can apply for the account if you live in another country and you are a:

• Crown servant or their spouse or civil partner
• Member of the British armed forces or their spouse or civil partner

You and your partner are both allowed to open your own Help to Save account if you have a household award of tax credits or Universal Credits.

How much do you have to pay into a Help to Save account?

Once you open a Help to Save account you decide how much you want to save, and how often.

• The maximum amount you can save is £50
• You do not need to make a minimum payment to get the bonus
• You do not need to pay into the account every month to get the bonus

Can I withdraw money from a Help to Save account?

The account stays open for four years. You can withdraw savings to your bank account or close it at any time.

But:

• You can only have one Help to Save account
• You cannot open another in the future
• You miss out on the next available bonus if you close your account early

How is the Help to Save bonus paid?

You earn two tax-free bonuses based on your highest savings balance.

At the end of the second year:

• Let's say you saved the maximum £50 each month
• You would save £1,200 in two years
• Your bonus would be 50% of that - £600

At the end of the fourth year:

• Let's say you keep saving the maximum £50 each month after your first bonus
• You will have another £1,200 at the end of the scheme
• You will receive another 50% bonus - £600

You do not get a bonus in year 4 if you withdraw all the money after two years and carry on saving. This is because your highest balance does not go over £1,200.

How does Help to Save affect my benefits?

You or your partner can save up to £6000 if you are getting Universal Credit or Housing Benefit.

• This includes any money in your Help to Save account
• Bonuses do not affect your Universal Credit or Housing Benefit payments

Help to Save does not affect how much Working Tax Credit you get.

Check if any savings or any bonuses from Help to Save can affect:

• Your application for other benefits, or
• How much you can get

How do I apply for a Help to Save account?

You can open an account online or through the HMRC app.

You will need:

• Your National Insurance Number
• Your bank account details
• This is where any withdrawals or bonuses are paid
• A Government Gateway account
• You can set one up as you apply

Call 0300 322 7093 to open an account if you cannot get online.

Do I have to use Help to Save to pay off my DMP?

No. Savings are in your budget to help you when you need them

You can use your savings however you like. You be able to:

• Cover unexpected costs, or
• Put it towards one-off expenses, like birthdays or Christmas

You may be able to make a settlement offer to the people you owe if you have a large amount of savings.

Check with your DMP provider if this is a good solution for you.

Other ways to save

There are other practical methods you can employ to help your savings pot grow if:

• You are not eligible for Help to Save, or
• You only have small amounts to save

Jam jar budgeting

You have a detailed budget if you are on a DMP.

Use the budget to put your money in jars, or envelopes.

For example:

• One for travel
• One for food
• And so on

When you need to spend, take the money out of the pot and put back any change.

Check how much money you have left at the end of the month.

• Add anything leftover to savings
• Review your budget if there is no money left

This method helps you see what you are spending.

You can also try:

• Keeping virtual pots on a spreadsheet or
• Tracking spending in a notebook

Small savings everyday

Saving a little every day can add up over the year.

You could:

• Start by saving a £1 in week one, £2 in week two, £3 in week three and so on
• Or, save 1p and increase the amount daily
• The most you would put aside in one day is £3.65
• But at the end of a year you could have saved £667.95

Round down savings method

The round down method puts you in control of how much you save and when.

• Pick a time to check your bank account (daily, weekly, fortnightly)
• Round down the balance
• Transfer it to a different savings account

So, if you have £56.78 in your account you could:

• Transfer £1.78 - rounding down to £55, or
• Transfer £6.78 - rounding down to £50

There are also apps that can help you save.

They work out what you can afford to put aside based on your spending habits.

You can also:

• Cap the monthly amount you save
• Cancel a transfer before it happens
• Withdraw any money you have already saved at any time

I am on a DMP and need help with my budget - can you help?

We give free debt advice to people with all sorts of debt problems.

Use our online debt advice tool if you want some help.