Savings from very little

steveouk

So as you will see from my last post elsewhere...  I am now living in a flat separated from my wife.  i had very little in savings when we split up and have had a lot of one off expenses getting set up on my own.  I now need to build a savings safety net - how much should I save  what accounts and can you give tips on the best ways? 
I earn a reasonable wage and there maybe potential for overtime in my job so that would help a huge amount but i need to make the most of anything i save 

400ixl

You will probably want an easy access savings account in the short term whilst you build up that safety net. Depending on what accounts you already have, you may want to consider the Chase UK account which is paying 1.5% interest. Not inflation beating but about the best you will get at the moment.

As for how much, that is a personal choice. When I started out I aimed for 6 months out expenditure (not earnings). This I thought gave a good buffer for any one off expenses and also in case of redundancy or sickness. You may well have been in your job for a long time and have a good redundancy package, and have a decent sickness package which would mean you don't need to cater for such situations.

I would work out what your outgoings are (all your monthly DD's and bills), along with a budget for food and other spends. Put that to one side, then put the rest into a savings account. Once you hit whatever your target is for your emergency funds you can then start looking at what is next, do you go for more longer term investments, or are there other things such as house deposit, car purchase, holiday etc that you are looking to save for.

Many of the modern accounts like chase or Starling allow you to create sub accounts to save for specific things. Chase also give s 1% cashback for 12 months on some debit card purchases.

MovingForwards

When I started over the first thing I did was set up a spreadsheet showing what my outgoings were. When offered a job I added that income and could see how much money was spare. Each month I 'paid' that spare money into a different bank account and treated it as another bill. If I underspent a budget eg food I'd move the surplus to savings.

I chased the best interest rates I could, with a couple of banks, and slowly began to fill up my accounts. 

Now my life is settled, I've my own home and money in the bank, yet I still keep an eye on different accounts to boost my savings a bit.

Depending on who you bank with, they may have a regular saver paying quite good interest. Fill it as your first emergency fund, focus on getting 1 weeks money together, then build up to 1 month, then 2 months etc. 6 months is the general safety blanket suggested, but it takes time. 

A couple of accounts I do suggest to people, when starting out is a virgin current account (over 2% for £1k) and their coach account 1.75%, £250 per month for 12 months). On top of that the likes of NatWest and RBS have regular savers over 3%, £150pm and to £1k for the good interest (only one account with each allowed). They all help while building money up.

There's a huge thread running in the saving section which lists the current good rate accounts, it gets updated on a weekly basis as things change.

anotheruser

steveouk said:

how much should I save  what accounts and can you give tips on the best ways?

Earn all you can.
Save all you can.
Give all you can.

Get an account that has a "round up" feature - Chase, Lloyds, TSB, Starling are four that I'm personally aware of.

When you get paid, transfer £XX into the savings account - make it a standing order so it happens without you looking.

Every time you think "I shouldn't buy this but..." transfer that amount of money into another savings account.  It'll build quite quickly.

A savings account is any old account these days, although Chase do provide a 1.5% interest savings account.

Daliah

Which Bank is your current account with? Santander, Natwest, RBS, FD have nice Regular Saver accounts.

Roundup accounts aren't for serious savers but if you happen to have an account with Natwest, RBS or Chase your might as well use them as these banks all pay a bit of interest on the roundups. Just don't expect to get rich from them.

For day-to-day spending and saving, look at Chase UK. You get 1% cashback on many everyday purchases, and they have the currently market-leading 1.5% account. The accounts are easy to get as they don't do hard credit searches, but there's a potential snag as not all Android phones can run the app (it's app only). No issue for iOS users who can run iOS 14 and higher.