Budgeting and emergency funds

Start with take-home pay

Plan with net pay – the amount that lands in your bank account – not your salary. On the example payslip (£30,000 salary, paid monthly, standard tax code, minimum workplace pension and a Plan 2 student loan) take-home is about £2,010.14 a month. Without a student loan it would be about £2,014.14, and on Plan 5 about £1,977.14. Your payslip will differ.

MoneyHelper's free Budget planner (opens in new tab) lets you list your income and outgoings, see what's essential and what you could save.

Sources (checked 17 October 2026): GOV.UK – Payslips: employee rights (opens in new tab); MoneyHelper – Budget planner (opens in new tab).

Four steps

1. Start with take-home pay. Use the figure that arrives in your account.
2. List the must-pays. Rent or mortgage, bills, phone, travel, debt repayments and subscriptions.
3. Pay future you first. Set up a standing order to a savings account for just after payday, before you spend.
4. Share out the rest. Turn what's left into a weekly spending amount and stick to it.

The 50/30/20 rule of thumb

A popular way to split take-home pay is 50% needs, 30% wants and 20% future (savings and extra debt repayments). It is a rule of thumb, not an official rule, and it isn't from a regulator – with high rent or low pay, many people can't hit it, and that's fine. Use it as a starting point and adjust.

Illustration only, using the example payslip's take-home pay of £2,010.14 rounded to the nearest pound.

Emergency funds: how much is enough?

An emergency fund is money set aside for the unexpected, such as a broken boiler, a car repair or a gap in income. MoneyHelper gives this rule of thumb: have three to six months' essential outgoings in an instant-access savings account. Essentials are things like rent or mortgage, food, heating, bills and anything else you can't live without.

The £1,000 row is MoneyHelper's own example; £1,400 is an illustration. Your essentials are your own figure.

• Any amount helps. Don't wait until you can hit the target: save what you can, as regularly as you can. MoneyHelper says saving smaller, regular amounts is often more effective than occasional large ones, and suggests a standing order or Direct Debit.
• Priority debts first. MoneyHelper says it can be cheaper in the long run to pay off credit card debt, an unauthorised overdraft, payday loans, door-to-door lending or mortgage arrears before piling money into an emergency fund. See our priority debts section.
• Keep it separate and accessible. An easy-access account means you can reach the money at once. See Savings for account types, and note the FSCS protects up to £120,000 per person, per banking licence ( details).
• Then think about investing. MoneyHelper suggests building the emergency fund first; see risk, spreading and protection.

Sources (checked 17 October 2026): MoneyHelper – Emergency savings: how much is enough? (opens in new tab); MoneyHelper – What's the difference between saving and investing? (opens in new tab).

Plug the leaks

• Forgotten subscriptions. Not used it this month? Cancel it and re-join later if you miss it.
• Little and often. A £4 coffee five days a week is £4 × 5 × 52 = £1,040 a year (illustration).
• The "it's only" trap. Delivery fees, in-app purchases and small buy now, pay later plans add up. BNPL is borrowing: see BNPL.
• Lumpy yearly costs. Birthdays, Christmas, the MOT and annual insurance: divide the yearly total by 12 and save that amount monthly.

Eight common money mistakes

These are general pointers, not advice for your situation.

See also: Pay, tax and your payslip · Savings · Insurance basics · Jargon buster.