A financial expert has shared three tips to help people build an emergency fund as millions of Brits reportedly have less than £500 in savings. 

33% of Brits have less than £500 saved, meanwhile one in 10 have no savings at all, according to new research.

The news follows an extensive 8,000-person study which has exposed the country's current financial vulnerabilities.

The research, conducted by credit management company Lowell, aims to emphasise the crucial need to improve our financial resilience nationwide.

How to build an emergency savings fund with three tips

Be flexible with your savings

The financial expert has explained that "the first step" is creating a realistic savings budget - something you can steadily build within your means.

The pros warned that it will take time to develop a substantial lump sum and you need to adjust you savings to the current financial climate.

As inflation rates and energy prices drop, the experts say that it is a great time to put as much as you can afford in a savings account.

Brits are also urged to keep their other expenses and bills in mind including council tax and road tax.

These may increase for some in the coming months so you should remember to adjust your savings plan accordingly to stay within your means and on track.

Change to an automated mindset

The financial experts also consulted a Psychologist who broke down the benefits of treating your savings as an automatic payment - the way we do with national insurance or our pension payments.

Speaking about savings, Dr Becky Spelman, Psychologist and Founder at Private Therapy Clinic commented: “When people see savings as a necessary expense for financial wellbeing, they will begin to view it as a priority.

"Automatic savings tools make it easier for people to save consistently, and help to normalise it.

“Once people start to see their savings account increasing in value each month, they are likely to feel accomplished, secure, and financially stable.

"This boost of confidence in their ability to manage money and reach their financial goals is likely to spur them on.

"The long-term benefits of savings will become clear - a safety net for emergencies, the ability to reach larger financial milestones, long-term financial security, and peace of mind.”

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Research what additional support is available

Life is unpredictable so there may be times when your income becomes drastically reduced as a result of illness or losing a job.

When this happens, it's important that you check your eligibility for different benefits by using a benefits calculator.

The financial experts continued: "Check if you have insurance cover you’ve forgotten about, Accident, Sickness and Unemployement (ASU) cover or legal cover can sometimes be added as an add-on to agreements.

"And don’t be afraid to speak to your lenders or service providers - they might offer flexible payment plans or even a payment breaks if you’re facing difficulties".

John Pears, the CEO of Lowell UK, commented on the research: “In a year marked by soaring inflation and interest rates, people have had to make tough decision to make ends meet, with the results from our latest survey shining a light on the widespread impact across different regions.

“We hope that the results from our recent survey will help to spark meaningful discussions and encourage people to use this time to assess their financial health and take proactive steps towards greater financial resilience amidst ongoing economic uncertainties.”

How much should I have in emergency savings?

There is no ideal amount for an emergency savings pot since it will depend on your income and circumstances.

However, Natwest has advised that you should have at least three months' worth of living expenses behind you which would act as a safety net should anything happen. 

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The bank urges people to start their emergency fund plan by examining their budget and then listing all of the expenses that need to be covered every month including the likes of your rent and bills.

It then suggests that you add these up and then multiply that number by the number of months you would like to save for.

The bank recommends something within the range of three or six (3 or 6 months).