Empowering the Freelance Economy

Does your emergency fund stack up to these targets?

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A new report suggests how much to save for an emergency fund based on where you live.

  • Freelancers and business owners express what the government should do next about the Cost of Living Crisis
  • Latest on how Klarna could affect your credit rating

Given the ongoing cost of living crisis freelancers in Great Britain are finding it increasingly difficult to build an emergency fund. Some are coming up short more than others largely because of where they live, according to research by money.co.uk, which calculated the average costs of: rent, monthly expenditure, childcare and council tax for six months to determine an emergency savings fund amount for each UK region. 

  • On average, childcare costs between £317 and £680 per month in the UK, with the cheapest services in Wales and the most expensive in London 
  • Council tax is cheapest in Scotland (£108.29/month) and most expensive in the East Midlands (£158.48/month
  • Monthly rent costs the most in London (£1,562), and the least in the North East (£540
  • Monthly household expenditure is highest in London (£3,046.77), and lowest in Northern Ireland (£2,107.73

Further cost comparisons can be found in the chart below.

“I’m a money saving specialist and even I am struggling to make ends meet,” says small business owner Maddy Alexander-Grout, Founder of the Southampton-based money-saving app, My VIP Rewards says the UK.

“The Government needs to wake up and act quickly because it’s massively underestimating the scale of the crisis we’re in. It’s asleep at the wheel. Interest rates need to rise to contain inflation, but it’s another massive blow to households and businesses around the UK,” says Alexander-Grout.

Keith Budden, MD at Hampshire-based IT security firm, Ensurety goes one step further and outlines the future scenario many freelancers could face in the coming months:

“The economy is rolling downhill towards recession and rate rises, which in theory will help curb inflation, could be coming too late. The Bank of England seems to be playing catch-up with inflation and is now noticeably behind the curve.

The Government needs to do a lot more to help the lower earners cope with rising rates and inflation, and they should impose a cost ceiling on energy costs for SMEs. It’s absolutely brutal out there.”

How much to save based on where you live

According to Money.co.uk people living in the South East are furthest behind on their savings. It is recommended they should have £29,000.08 put aside for six months, whereas the average person in the area has just £9,885.55 – that’s £19,114.53 or 66% less. For those without children, recommended savings are £25,675.33 (which is still down £15,789.78). 

Recommended saving amounts in the UK 

UK region Recommended six-month savings (incl. childcare) Average actual savingsCurrent savings deficit% Deficit
South East £29,000.08 £9,885.55 -£19,114.53 -65.9%
South West £25,401.80 £7,140.18 -£18,261.62 -71.9%
East of England £25,736.73 £8,032.85 -£17,703.88 -68.8%
East Midlands £22,666.77 £6,438.48 -£16,228.29 -71.6%
North West £22,327.59 £9,156.79 -£13,170.80 -59.0%
Yorkshire & Humberside £21,567.45 £8,406.60 -£13,160.85 -61.0%
Scotland £20,295.04 £7,297.19 -£12,997.85 -64.0%
Northern Ireland £19,392.96 £6,710.00 -£12,682.96-65.4%
Wales £20,139.64 £9,648.91 -£10,490.73 -52.1%
North East £20,052.12 £10,022.58 -£10,029.54 -50.0%
West Midlands £21,956.88 £13,318.35 -£8,638.53 -39.3%
London £32,509.21 £28,978.40 -£3,530.81 -10.9%
Source: Money.co.uk

The South West follows in second place, where recommended savings are £25,401.80 with childcare. On average, people in the South West have approximately £7,140.18 already saved, meaning a family with children would need an additional £18,261.62 on average for six months of living; a 72% deficit.

On the other hand, Londoners are closest to their recommended savings targets. Recommended savings for six months of living is £32,509.21, but with London’s higher salaries the average person already has around £28,978.40 saved. They’re just 11% or £3,530.81 short

Zena West, a glass artist at Nottinghamshire-based West Art And Glass says with interest rates and inflation rising: “I have gone into survival mode.”

West adds: “I’ve resisted raising my prices for now amid the cost of living crisis, but it is inevitable. I’ve also had to stop investing in my business or expanding my range, as money won’t allow it. Where is the Government support for the small businesses that are the bedrock of the economy?” 

Salman Haqqi, finance expert at money.co.uk

Salman Haqqi, finance expert at money.co.uk. says “a growing savings account is hard to come by, and most people will struggle to have huge numbers sitting around in bank accounts with low-interest rates. Nevertheless, having a safety net in the case of emergencies such as job loss could save your life in the future.”  


Haqqi offers these tips to help you start saving, no matter how small the amounts: 

  • Set savings targets –many banking apps have reminders and goals built-in that you can use to help you save 
  • When you make a conscious decision to forego a treat, put that money straight into your savings – skipping a cup of coffee or slice of cake every so often means an extra few pounds can be put away for saving 
  • Consider selling items you don’t use anymore to bolster your savings account – use websites such as eBay and Vinted to sell old household items that you don’t need anymore. This money you wouldn’t have had otherwise can go straight into savings.”

How can Klarna affect your credit rating?

The buy-now-pay-later firm Klarna will start to tell to UK credit agencies about product use and reveal whether customers are keeping up with payments.

A financial expert warns that anyone using buy-now-pay later services, such as Klarna, must be vigilant about making payments on time.

Joshua Gerstler, chartered financial planner at Borehamwood-based The Orchard Practice, says the new rules are not necessarily a bad thing: “The more transparency around buy-now-pay-later companies, the better.”

Many would-be and existing mortgage borrowers may think twice about this type of debt which will now start to appear on their credit report. For those that pay on time, it will potentially help boost their credit score, but for those who do not pay on time, it is likely to cause them problems.

Joshua Gerstler, The Orchard Practice

Gerstler continues: “The solution? If you cannot afford to pay for something now, don’t buy it. This is more important than ever amid the cost of living crisis and with interest rates rising.”

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