Keeping your savings separate from your spending
A lot of people start emergency funds with good intentions, but then dip into it as soon as it starts to grow. Keep your emergency fund separate from your other accounts and only use the money in a true emergency.
Open a separate bank or savings account
You could open up basic bank account, which have no overdraft facility or any of the extra features you may get with a current account.
They do however give you somewhere ‘safe’ to store your savings. You’ll also get access to internet banking, get a contactless debit card and have the option to set up Direct Debits.
You may be able to open a savings account alongside your current bank account, this will earn you interest on your savings.
It's important that you use an instant access savings account. You don’t want your money to be in a locked savings account or invested. The point of the fund is to be able to get your money out fast in an emergency.
Speak to your local credit union
Many people choose a credit union for a savings account. If you’re working, your employer may let you pay directly into a credit union account from your wages. This reduces the chance of you spending the money intended for the emergency fund.
Stick to saving your coins in a lockbox
Sometimes having your savings physically to hand can be reassuring. You can access them whenever you want, and you can see your progress based on how full your jar becomes over time.
If you want to get your children involved with saving money, you could decorate the jars, or try some fun saving challenges.
Use the Help to Save scheme
If you’re entitled to Working Tax Credit or Universal Credit, you may be eligible to open a Help to Save account. This is a government-funded scheme that helps people on low incomes boost their savings by 50p for every £1 saved.
Read more about the Help to Save Scheme to find out if it applies to you.
Pay priority debts before saving for your emergency fund
Whilst it’s good to start saving as soon as possible, before you start you should make sure you cover any priority debts.
Priority debts might include, mortgage or rent, child maintenance, council tax. You should also pay any high interest debts such as loans or credit cards.