If you are living on a low income it can be difficult to find the time and the means to save money for the long-term and to build a future rainy day fund. When living on a strict budget there can be times where you are in desperate need of a short-term fix, and even though you might be able to gain access to assistance from friends and family, or utilise the services of a responsible payday loan lender in the short-term, for long-term savings it is best to get the quality debt advice and develop a plan that suits your employment, financial circumstances and budget.
One way in which you can save for a rainy day is to look to the government backed Help to Save scheme. The Help to Save scheme is a savings account that has been designed to help those within a low-income bracket to boost their savings. For every £1 saved, it boosts the savings by 50p. With government backing it is a secure bank account, and you could be eligible to open a Help to Save account if you are entitled to Universal Credit or Working Tax Credit.
The idea behind the help to save scheme is simple. Once you have opened up an account you can deposit money into it as little or often as you wish, and as little as you want (or can afford) to deposit. There is no minimum amount required in order to receive the tax-free bonus, but there is a maximum amount of £50 per month that can be deposited. You can withdraw the savings whenever you wish, with the cash savings being sent direct to your bank account. The scheme is designed for a bank account to last for 4-years in total, though you can close your account at any point during the 4-years if you wish to do so.
There are two tax-free savings bonuses that you can collect and withdraw into your personal bank account. It is based on how much you save, and it does not matter if you have withdrawn money or not from the savings, you’ll be entitled to the bonus, it just means you will be affecting your chance of receiving the maximum bonus amount. The first bonus is paid at the end of the second year of the account being open and is 50% of the highest balance saved. With a deposit of the maximum amount of £50 per month you will at that stage have saved £1200, so the bonus will be £600. The second bonus comes at the end of the 4-years of the account being open. It is 50% of savings into the account above the highest balance you have saved. So, if you continue to add £50 per month, you’ll receive a further £600 at the end of the 4-years.
It is possible that a help to save account could affect your eligibility for certain benefits so we would always advise that you seek out that information from the scheme providers, as well as from the contact for your benefits prior to applying for an account.