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6 ways thinking small can make a big difference to family finances

Vicky Shaw offers six simple tips to boost those all-important savings pots so you can have fun without breaking the bank

With families gathering together soon to celebrate Mother's Day, now may be a good time to start conversations about how to get the household finances in shape for the rest of 2018 - whether it's getting the kids into the savings habit, or setting up money goals for plans you've got later in the year.

Here are six ideas to help get those family finances sorted ...

1. Set up a rainy day fund

The average UK family could only sustain their lifestyle for less than two months - 46 days, to be exact - if they were to suddenly lose their main income, research from Post Office Insurance suggests. It's wise to have a pot of cash you can easily access if you suddenly have to pay an unexpected bill, such as a new boiler or a household repair, or if you have to cope with a sudden dip in your income. It's often suggested you should have money set aside that's enough to cover at least three months of outgoings, and more if possible.

2. Start savings goals for fun stuff

If you've got an emergency fund sorted, you could consider setting up a family savings pot for fun stuff that may otherwise have to go on credit, such as summer holidays, trips out, or even next Christmas. Having a specific goal in mind when you're putting money away, for example if you're imagining the fun you'll be having on the beach this year, could make saving seem less painful.

3. Make sure what's in your home is covered

The average household contains £35,000 worth of possessions, which is more than the average annual salary, at £27,000. But an estimated £266 billion worth of household possessions across the UK are not insured against risks such as theft, fire, flooding and accidental damage, according to the Association of British Insurers (ABI). A quarter (28%) of households do not have home contents insurance. The ABI says the average cost of home contents insurance is £141 a year - working out at less than £3 a week. Combined buildings and contents policies can cost under £6 per week.

4. Kick off a savings habit with the kids

If you're looking to lock money away for your child for the longer term, a Junior Isa could be an option, or you could try a regular savings account. Rachel Springall, a finance expert at, says: "It's easy to start saving for a child as a Junior Isa can be taken out, completely tax-free, and matures into an adult Isa when the child turns 18. Savers can choose a cash interest option or a stocks and shares."

Springall says cash Junior Isas tend to offer higher rates than other types of children's savings accounts. Over the longer term, a stocks and shares Junior Isa may outperform the low interest rates on cash savings currently on offer. But savers going for this option need to be prepared for fluctuations. For those looking for savings accounts which can be used for short-term goals and accessed before the child reaches adulthood, Springall highlights HSBC's MySavings account for children aged from seven years.

From age 11, HSBC also offers a current account to help children learn to manage their money. Pocket money apps could be another option, Springall suggests, adding: "In this era, digital tools are likely to be a more attractive choice for children to learn the value of money."

5. Get on top of household bills

As these will likely take up a big chunk of your income, it's well worth taking the time to see if you can get a better deal elsewhere - include everything such as energy, food, broadband, childcare and the mortgage.

6. Give your wardrobes a spring clear-out

We typically add 37 items of clothing to our wardrobes every year. And once we've found an item, we can be reluctant to discard it - the oldest items in wardrobes being typically just under 12 years old. The average monthly spend on new clothes was found to be £91. So if your wardrobes look ready to burst, have a clear-out; there may be items you've forgotten about.

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