How to Start Saving with Small Deposits?
According to the savings statistics, “UK households deposit just 3million with banks and building societies.” The figure is 58.73% less than the total amount deposited in March 2025. Moreover, an average person has £16,067 in savings. Yes, the statistics are worrisome because individuals struggle to save enough. It is due to the high cost of living, low wage growth, existing debt, and insufficient financial education.
How many individuals are struggling financially in the UK?
Millions of people are struggling financially. The figures range from 11 million to 20 million in 2025. Here are some of the statistics related to the financial struggles:
- Over 7 million people were going without essentials in the six months to May 2025
- 16% people in March 2025 describe their financial position as struggling
- 1 in 6 UK adults have no savings at all.
These figures highlight that while some indicators, such as average household wealth, show signs of improvement, a substantial portion of the population continues to face significant financial hardship due to factors like housing expenses, the high cost of living, and a low savings buffer.
How much should you have in savings?
There is no hard-and-fast rule for determining how much you should save. It depends on your income, life goals, purpose of savings, and the time frame. Here is how you can split the savings:
- Less than a Year- you can use it to target a holiday, buy a specific gift, or pay off larger bills.
- Less than a decade- You may consider this savings term to save it for a large, specific goal like making a down payment on a house.
- Lifetime- You can save money for the future and retirement purposes with a Lifetime ISA account.
However, if you want to know how much you should save according to your age, read ahead.
| How much salary should you save | Amount of savings |
| 1x of your salary by 30 | £37,430 |
| 3x of your salary by 40 | £112,290 |
| 6x of your salary by 50 | £224,580 |
| 8x of your salary by 60 | £299,440 |
(SOURCE: It is according to money.co.uk)
7 Actionable tips to save with small deposits
Now you know the amount you should save and the strategies you can choose from. Here are some tips to begin with:
Step 1- Set up a specific goal
It is important to prioritise the goals and save accordingly. For example, if your child completes his schooling, you must prepare for university admissions. Prioritise the goal over the New York Christmas holiday that’s on your wish list. Next, decide how much amount do you need to put forward every month. Decide on a comfortable one.
For example, if you want to save money for car repair but a sudden drop in income affects the savings, re-analyse the gap. Identify how much money you can save now comfortably.
If you cannot wait any longer and need to repair the vehicle immediately, check a loan for car repair with a bad credit score. Yes, a fall in income also affects your credit score slightly. Therefore, the loan may prove the best fit for your critical car repair needs. You may get the amount the same day. However, the terms you get remain competitive due to poor credit history. Try to stick to the loan repayments without missing any. Otherwise, it may affect your overall financial progress.
Step 2- Choose the right account type
Different accounts suit unique life goals. Here are some to consider:
| Account type | Suitable for | Features |
| Easy to access savings account | Short-term savings goal, and flexibility over savings. | You can withdraw funds anytime. However, it comes with low interest rates. |
| Regular Saver Account | It is ideal for those who want to build a savings habit | You can pay in monthly instalments (£10-£250) at high interest |
| Cash ISA | Tax-free savings | Up to 20000/year, tax-free interest |
| Lifetime ISA (LISA) | Best for planning the First home or retirement | 25% government bonus |
Tip: Understand how each account works against your savings goal. It will help you choose the right account type for your goals.
Step 3- Automate the savings
If you want to ensure discipline savings without missing any, automating one helps. By doing so, you can achieve your savings goal on time. Having a bank account with direct debit is a must here. Go by one thing- “Pay yourself first- Save money before you spend.”
You can go by this traditional method to automate savings:
- Set up a separate savings account
- Decide on a fixed monthly account
- Set up a standing order- you can use online banking to set up a recurring or fixed payment from your account to your savings account.
- Time is just right- Schedule the transfer on the day you get your salary.
You can also tap modern applications like Monzo, Plum, and Chip to automate the savings. These applications come with advanced features and benefits.
However, for the savings to work, you must review the automated savings. Does it still meet your changing life goals? Does it provide high interest rates? Identify whether you can transfer the accumulated savings into a high-interest savings account.
Step 4- Focus on consistency, not perfection
Most individuals split the income into multiple goal baskets. It could be
- Saving £10000 for the rent deposit
- Saving £5000 for the car purchase deposit
- Saving £12000 for marriage needs
And the list goes on. You may not know, but considering too many aspects at a time affects your goals. You may struggle to save even for one single goal. Therefore, stick by one at a time. You can prioritise it according to short and long-term goals. For example, here, you should focus first on the rent deposit rather than thinking about wedding requirements.
Step 5- Move extra savings wisely
Identify how much money you are left with after meeting the specific goal. Next, analyse your next big and important goal. If you have no bigger or immediate goal, you can save a portion of it towards the emergency savings. It helps you keep tabs on the unplanned and helps you tackle emergencies without panic.
Bottom line
These are some of the best ways to start saving money with small deposits. Yes, you don’t need to begin with a huge amount if you can’t. Instead, identify your most important goal, check the amount you must save, and pick a number that you can save without worries.
Additionally, the Check Cash ISA and the Lifetime ISA account for tax-efficient savings. It could be ideal for bigger goals like retirement planning, starting a business after retirement, buying a home, etc. Lastly, monitor and review your goals and savings. If the amount no longer serves the purpose, re-analyse the requirements and save money accordingly.
