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Saving money and increasing income

Saving for emergencies: Putting money away for a rainy day

Most of us will have to deal with unexpected costs at some point and this can be hard to deal with if you’re already on a tight income. 

Unexpected costs can push people into debt or make an existing debt problem harder to deal with.

Having money set aside in an emergency fund can make emergencies easier to deal with. We’ve put together some tips to help you save up an emergency fund.

What are unexpected or emergency costs?

There are many unexpected or emergency costs that a person may need to deal with. They can be small or large, short-term or affect you on a longer-term basis. It could be that you need to:

  • replace a household appliance, such as a fridge or a boiler
  • make expensive repairs to your car or house
  • take on extra living costs following a relationship breakdown
  • have emergency dental work

It’s not an option to cut back or avoid spending on these types of things. Putting aside some money is a huge help in these circumstances. Taking out credit might seem like your only option without savings, but this could be worse for your finances in the longer term.

How much should be in my emergency fund?

You should aim to build your fund to cover at least three months of living expenses. But the more you are able to save the better off you’ll be in an emergency.

It may take a while, but something is always better than nothing. Emergencies or unemployment can happen without warning, at the worst times.


Are you struggling with the rising cost of living? Read our guide.

What if I can’t afford to start saving?

If you have debt or you’re living on a tight budget, saving money is harder. But any amount of money you can put aside will add up over time – so start small with spare change.

You’ll need to allow time for your savings to build up. Don’t expect you’ll be able to have a ‘full savings pot’ by next week or next month. This probably isn’t realistic and putting such pressure on yourself isn’t going to help.

There are lots of ways to ‘maximise your income’ to help you get started with saving for an emergency. Read our money advice guide.

Follow these tips to save money for a rainy day

Regularly review your spending against your monthly budget

By checking how much you spend each month, you may see opportunities to save money.  Get help by following our budgeting guide.

Put any small change you get throughout the day in a jar

At the end of each month, you can then put the coins into a savings account. If you’re paying the money in over the counter at a bank, you must put the coins in plastic deposit bags. You can ask for these at your branch. 

Remember that coins must be sorted by denomination before you take them to the bank. For example, five pence coins must be in their own bag, and you must have £5 worth of coins in the bag before you can deposit it. Some banks will only let you pay in five bags at a time.

Some supermarkets have coin deposit machines which give you bank notes in exchange for your coins. Keep in mind however that these machines charge a fee of around 7p per pound.

At present, banks don’t charge a fee for depositing coins, but they may refuse to take them altogether if it’s busy.

Save up your coins digitally

There are several banking apps for your phone that monitor your spending. They can also ‘round up’ each purchase you make to the nearest pound and put the difference between the true price and the rounded-up price into a digital savings pot.

These apps are often free to use. Also, you can either access your savings pot at any time or ‘lock it off’ for a later date.

Get money off your bills and online purchases

People who regularly price-compare their gas and electric bills can save hundreds of pounds per year. The same goes for mobile phone contracts. There are also websites that help you challenge your current provider if you feel you're being charged more for your bill than other customers. 

If you use cashback websites, you could pay the money you earn from online purchases into your savings account.

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.

I have an emergency and no money to cover it – what can I do?

If you have an emergency right now, help may be available. There are emergency money assistance schemes in place to help people if they’re unable to buy necessities such as food, fuel and other expenses. 

Don’t wait to get expert advice on dealing with money worries. When you come to us for help, we’ll work through your budget with you and provide you with recommendations on how to deal with your debts, based on your circumstances. Get free and impartial debt advice online.

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