Savings & Emergency Fund
Why the buffer comes first
An emergency fund turns a car repair or boiler breakdown from a debt event into a mere annoyance. Aim for a starter £1,000, then build toward 3–6 months of essential outgoings.
AER vs gross, and not losing to inflation
AER (Annual Equivalent Rate) shows the true yearly return including compounding — use it to compare accounts fairly. If your savings rate is below inflation, your money slowly loses buying power, so shop around.
Where to keep it
Use easy-access for the emergency fund and a fixed-rate or notice account for money you won't touch for a year or more. Your Personal Savings Allowance (£1,000 basic / £500 higher rate) shelters interest from tax outside an ISA.
Your money is protected up to £0 per authorised bank by the FSCS — spread larger balances across separate licences.
Premium Bonds & Help to Save
Premium Bonds (NS&I) pay no interest but offer tax-free prize draws with 100% government-backed capital — fine for some, though average returns can trail a good savings account. Help to Save gives a 50% bonus to eligible people on Universal Credit.
That's all 4 sections.