Energy bills are set to rise by 13% from July 1, with the regulator Ofgem predicting that households will typically pay £221 more a year. This means bills will average £1,862, adding further strain amid the cost-of-living crisis.
Expert Advice to Build a Financial Safety Net
To help households manage the upcoming increase, the loans team at Compare the Market has partnered with personal finance author, broadcaster and educator Abigail Foster. She shares six expert tips to build a financial safety net and feel more prepared for unexpected bills.
1. Save Small Amounts Regularly
If possible, put even £5-£10 a week into an "unexpected expenses" pot. Over time, this adds up and creates breathing space, making financial surprises feel less overwhelming.
2. Automate Your Savings
Set up a standing order to move money into your safety net fund on payday. Automation ensures consistency, so your protection grows in the background without relying on willpower.
3. Track Predictable Irregular Costs
Identify bills that catch you out, like car MOTs or pet checkups. These are not emergencies but predictable expenses. Create separate "sinking funds" for them to budget more accurately.
4. Protect Your Savings with Insurance
Savings are your first defence, but insurance and warranties act as a backup. Having the right policies for home, vehicle, pet, or holiday spreads risk and shields your savings from being wiped out by emergencies.
5. Redirect Refunds and Savings
Whenever you receive a refund, cancel a subscription, or save money by switching suppliers, redirect that extra cash to your safety net. This reallocates money to work harder for your future self.
6. Keep Your Budget Flexible
As life changes, adjust your budget accordingly. Starting a new job, moving house, or growing your family may require updating your safety net requirements. Review your pots regularly to ensure they still align with your responsibilities.
Abigail Foster emphasises: "Taking time to write your finances down, spot spending patterns, build a small emergency fund and check that you’re still getting great value for your outgoings can all help things feel more manageable." She also encourages open conversations with friends and family to swap tips and share experiences.
