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i The advice on this page applies to anyone with personal debts taken out in the UK.

Saving money and increasing income

How do I save money for an emergency or rainy day?

Most people will have to deal with unexpected costs at some point in their lives. This can range from a broken appliance to a loss of income due to unemployment or illness. Having money set aside can make emergencies easier to deal with.

Unexpected costs can push people into debt, or make an existing debt problem harder to deal with. We’ve put together some tips to help you save up an emergency fund.

What’s an ‘unexpected cost’?

There are many unexpected or emergency costs that a person may need to deal with, such as:

  • Car breakdown costs
  • A sudden loss of income through unemployment or illness
  • Splitting up with your partner and taking on more living costs once they leave
  • Emergency dental work

These expenses become an emergency when you’re unable to delay payment on them. For example, if you need your car to get to work, you mightn’t be able to avoid paying for expensive repairs. Not having a car could put your job at risk or mean further losses of income. 

How can I start a savings fund if I'm on a limited income?

When you have debt, saving money might be really difficult. This is understandable, especially if you’re on a limited income. However, any amount of money you can put aside will add up over time.

You’ll need to allow time for your savings to build up. Don’t put pressure on yourself 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.

Want to save money on bills and living costs?

Our money-saving and money-making tips can help you get the most out of your budget.

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How can I realistically save money for an emergency?

There are several ways you can save money based on what you can realistically afford.

You can:

Regularly review your spending against your monthly budget

By checking how much you spend each month, you may see opportunities to save money.

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.

Where can I store my savings?

There are several ways you could store your savings, depending on your needs:

  • Open an emergency bank account that’s separate from your normal account. Basic bank accounts 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.
  • 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 into a credit union account at source. This reduces the chance of you spending the money intended for the emergency fund. (Please note: you may need to call into a credit union branch during opening hours to access your money. This might not be ideal in some emergencies).
  • Stick to saving your coins in a jar. 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. 

Do I qualify for 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.

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. 

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