How to build up a rainy-day fund

Life doesn’t always go to plan, and when the unexpected happens, it can often prove costly.

Whether it’s a broken boiler, a car repair or an emergency trip to the dentist, these things are rarely cheap.

And if you’re on a tight budget, even a small shock can have a big impact.

In fact, a new poll by the Salvation Army has found that almost half of UK adults (48%) fear they’d be unable to pay their rent or mortgage if they were hit with an extra £100 expense.

That’s why having a rainy-day fund - a pot of money set aside for emergencies - is so important.

Five ways to build a rainy-day fund

1. Start small

You don’t need to save hundreds right away.  
 
Even if you only put aside £1 a week, it’s better than nothing. 
 
So why not take small steps like putting your spare change in a jar at the end of each day? 
 
And then at the end of the month, you can put it into a savings account. 
 
Alternatively, you could use a banking app that rounds up your spending and puts the extra pennies into a savings pot.

2. Review your budget

Get on top of your spending habits so you can be sure you’re making the best use of your money. 
 
Ask yourself questions like:

• Are there subscriptions I’m paying for but not using?
• Could I switch energy or phone providers to save money?
• What small treats or habits could I cut back on, just a little?

You might be surprised where you can free up a few pounds. 
 
We’ve put together a handy guide on creating a budget, and we’ve got a free budget planner to get you started.

3. Keep savings separate

It can be tempting to dip into your savings when they sit in your current account.

You can take away that temptation by opening a separate savings account, ideally one with instant access so you can get to the money fast in an emergency.  
 
A basic savings account, with no extras or overdraft, could be an option worth looking at, or maybe a credit union account, where you can pay in directly from your wages.

4. Deal with debts before you start saving

If you’re in debt, deal with them before you start saving, especially if you have priority debts, such as rent, council tax and court fines. 
 
Missing priority debt payments can have serious consequences, such as being visited by bailiffs or losing your home. 
 
Get these under control first, so you’re in a better position to start putting money aside.

5. Use free support and schemes

If you're claiming universal credit, check if you're eligible for the Help to Save scheme.  
 
For every £1 you save, the government adds 50p - up to £1,200 over four years.  
 
That’s free money for your emergency fund.

What if I can’t afford to put money aside?

If you’re already feeling stretched to the limit, then putting money into savings might not feel like an option. 
 
But help is out there. 
 
We’re here to listen to you without judgement, understand you and improve your financial wellbeing, whether that’s through:

• helping you budget
• letting you know what benefits you’re entitled to
• recommending debt solutions

How much should I save for emergencies?

A good goal is to have enough saved to cover around three months of your living costs - things like rent, bills, food, and transport. 
 
That might sound like a lot, so don’t expect to get there straight away. 
 
Even a small amount can help when something unexpected happens. 
 
Life doesn’t give much warning, so if you have a financial shock, such as losing your job or a sudden repair bill, having even a little bit of money put aside can take away some of the stress.