It’s not as hard as you think to save £3,000 in a year – you just need to think small. Here’s how you can easily save up a decent emergency fund by making a few simple changes
With just a few small changes to your financial habits, you will see how easy it can be to build your emergency fund(Image: Getty Images)
Did you know that two in five working adults have less than £100 in savings? Make it your 2025 goal to end the year with a reasonable emergency fund. A £3000 fund is enough to cover emergencies, and will help you get through tricky times such as redundancy.
A target of £3000 sounds like a lot, but with just a few small changes to your financial habits, you will see how easy it can be to build your emergency fund. Break into smaller targets Rather than telling yourself you have to save £3000, think about that in a monthly or even weekly amount.
This makes it feel more achievable, especially if you create a tracking system to motivate your savings. You might be surprised how motivating ticking off amounts on a list and giving yourself a gold star sticker can be, no matter what your age!
READ NEXT: National Express West Midlands answer five questions as fares rise
READ NEXT: 13 new laws coming to UK in 2025 from TV adverts to passports and childcare
Don’t miss the biggest and breaking stories by signing up to the BirminghamLive newsletter here
To save £3000 in a year, that’s £250 a month, or £57.70 a week, or £8.20 a day, reports the Mirror.
For many, those figures still seem too high – after all, £8 can feed a family of four for a homecooked dinner. To make the savings target easier, try to aim for three different targets: £1000, £2000, and £3000.
The first £1000 is essential, while £2000 is better and £3000 is ideal. Saving £1000 in a year is just £2.73 a day, £19.20 a week, or £83.30 a month.
Study your budget.
Take a few hours in the next week to study last year’s income and expenses. Gather your credit card, loan, and other finance statements, your payslips or income records, and your bank statements.
You can use an app like Plum or Emma to analyse your bank records to make this a lot easier too – they’ll automatically tell you where you’ve been spending your money!
Next, set up a budget. Work out your essential costs: rent or mortgage, utilities, internet, mobile phones, car insurance, home insurance, and groceries.
Allow extra each month for things like birthday gifts, clothes, and school costs if you have children. Next, create a list of non essentials that you feel are important, like streaming services.
Finally, write a list of things you could easily stop spending on, like buying lunch at work. You could easily find £25 a month of excess spending you don’t need – taxis when you could walk or take the bus, switching to own brands, having one glass of wine less a week.
Find compromises. Having a low income or not much spare at the end of each month doesn’t mean you need to live frugally or are not allowed luxuries.
However, there may be places you can make some compromises to save money. For example, if you always get a takeaway dinner at the weekend, see if you can do this every fortnight instead.
That’ll save around £100 a month (£50 for each takeaway) for an average couple, even more for families. You’ve got £1200 in the bank by December already!
Compromise doesn’t necessarily mean giving up on things. Small changes can accumulate to significant savings.
For instance, if you’re a regular consumer of takeaway coffee, purchasing several cups a week, consider investing in a reusable mug for about £10. This could save you 50p on each coffee, meaning the mug would pay for itself after 20 coffees.
If you consume five drinks a week, the mug would pay for itself in four weeks. You’re not giving up your favourite beverage, just changing its container!
In less than a year (40 weeks), you’ll save £100 without sacrificing your drink.
Additionally, you could consider downsizing your drink if you usually opt for a large one, saving approximately 80p each time – that’s £4 a week or £192 in a working year (48 weeks). So, without compromising on enjoyment, you’re already around £300 richer.
You might also want to explore alternatives to your current expenses. For example, if you have multiple TV streaming subscriptions, consider rotating them monthly instead of maintaining several simultaneously.
With the average subscription costing £9.99 and most households having four or five, it’s easy to unknowingly spend £50 or more a month. By rotating your subscriptions, you could save around £40 a month or £480 a year!
Look out for cashback deals
Register on cashback sites like Topcashback and Quidco, and utilise them!
Set them as your homepage to ensure you’re reminded to use them every time you open your browser. Cashback sites can earn you hundreds of pounds back each year on your usual spending, particularly if you look for deals on things like switching your broadband and car or home insurance policies through them.
On the MoneyMagpie team, we’ve each saved an average of £640 every year just by using cashback sites for online purchases and insurance or utilities switching.
Install a water meter. If you’re single or in a couple and don’t have a water meter, you could be paying far more for your water than you need.
Tenants in rented accommodation are entitled to switch to a meter, although it’s a good idea to let your landlord know as once a property is metered it can’t be changed back. A case study from a MoneyMagpie team writer, a single person in a flat, saw their bills drop from £145 to £39 a quarter once a meter was installed.
That’s a whopping annual saving of £424, all from a simple – and free – action.
Properties with high water usage (such as large gardens) or families might not suit a meter, but it is worth talking to your water company to find out if you would benefit.
Small changes, big savings. If you implement the cost savings highlighted in bold above, that’ll leave you with an extra £3069 a year – over your savings goal!
Naturally, these are just a few ways to save even when you feel stretched thin. For those on a very low income receiving Universal Credit, don’t forget to apply for a Help to Save account – you can stash away up to £50 a month (£600 a year) and in the second and fourth years, you’ll receive a Government bonus equivalent to 50% of your highest balance held during those two years.
So, if you manage to save £50 each month consistently, that’s £2400 tucked away over four years PLUS an additional £1200 from the Government!