Why should I save money?

Saving money helps you manage your finances and is an important part of dealing with debts. If you have savings you can plan for future spending, like a car MOT, and deal with emergencies, like replacing a washing machine.

Your budget

If you have debts, doing a budget will help you make good decisions about what to do. A budget shows the amount of money you have coming in each month (your income) and the amount you pay out each month for essential living costs (your outgoings). You can use My Money Steps to work out your budget.

Outgoings

Many outgoings, like rent or mortgage payments, are paid monthly. You might also have outgoings that need to be paid at different times through the year. For example, replacement school uniform, a car service and Christmas gifts. Work out how much money to save each month to pay these occasional costs when you need to.

Emergencies

Try to save money for emergencies if you can. Most people have unexpected costs, like having to replace something when it breaks.

Keeping savings safe

Open a separate account that is just for your savings. If you keep savings in your day-to-day account, you may lose track of how much money is for savings and how much is for normal monthly spending.

Make sure your savings account is not with a bank or building society you owe money to. If you owe money to a bank or building society, they can usually take money from an account you have with them to pay towards the debt. Make sure you can easily take money out of your savings account when you need to.

How to save money effectively

Set up a standing order with the bank where you keep your main day-to-day account, to transfer money into your savings account each month. You can cancel or change a standing order if you need to.

Help to Save

The government has introduced a savings scheme called Help to Save. This can add 50p for every £1 you save over four years. Help to Save is aimed at people on a low income who are claiming certain benefits.