How to save money even when the budget is tight

Saving money after an expensive month like December may feel impossible, especially when there are debts to clear and the cost of living remains high.

Financial experts say it is crucial to put some money aside for emergencies, but how do you tighten the purse strings to free up these valuable pennies?

The interest being paid on some savings accounts now is better than anything seen for 15 years, so it will pay to spend some time putting your money in the correct place.

The benchmark interest rate set by the Bank of England has been rising consistently for nearly two years, and may now have peaked. The cost of living has also been going up, with prices rising at a rate still well above target.

That means two things for any money we have set aside.

Firstly, the returns (or interest) being offered on savings accounts has improved, although borrowing is more expensive. For example, you may find an account paying 5% a year, so £1,000 saved for a year will earn £50 in interest. Save for lots of years, and that lump sum keeps building under what is known as compound interest.

Secondly, the buying power of the money we do have saved is being diluted by rising prices.

Bank of England figures show that there is £268bn in non-interest paying accounts - which are primarily current accounts.

Experts say that finding a good savings account for that money will help people benefit from those higher rates, and counter some of the downsides of rising prices.

Investing the money is another option, although that carries greater risks.

High energy and food bills mean that, for many people, their money doesn't last until the end of the month. Finding anything to set aside is difficult.

If you have debts that need bringing under control, then that is widely considered to be the priority, ahead of any savings decisions.

However, putting some money aside regularly into an emergency savings fund can help avoid serious debt. If your car breaks down, or the children's school shoes need replacing, then it is better to have money available than to borrow it.

You also might want to save throughout the year for Christmas or holidays.

The general advice is to spend some time going through your finances, then set a savings goal, and to start with saving a small, manageable amount on a regular basis.

The Building Societies Association, which runs UK Savings Week, has a guide about how to get started.

This is where it can get quite complicated. There are a wide range of savings products available, and your personal circumstances will determine which is best for you.

The most basic savings product is an easy-access account. They tend not to have the best interest rates, but you can withdraw your money whenever you like.

Some accounts such as fixed-term accounts or bonds pay more in interest but your money is locked in for a certain period of time.

Anyone starting out might consider regular saver accounts, some of which are sold alongside current accounts. Again you might not be able to access the money for a certain period of time and, by starting small, it may take time before any meaningful interest is built up.

Also, there are notice accounts, which require you to tell the provider in advance when you plan to withdraw money. Alternatively, you can forgo interest and instead enter a prize draw, such as with Premium Bonds.

If you don't have access to a bank account, then credit unions offer the opportunity to save. Savings scheme incentives provided by the government may encourage longer-term savings. particularly for children.

There are plenty more and, with such a variety, it is best to shop around. That shouldn't only be for the best interest rate but, perhaps more crucially, to find the account that best suits your needs.

Anna Bowes, founder of the independent Savings Champion website, says some savers can suffer from "choice paralysis", so it might be best to set yourself a deadline when making a decision.

Helpfully, every account now displays a summary box outlining its key features, which makes it a bit less time-consuming to compare between them.

Definitely not. Banks, building societies and other savings providers often advertise eye-catching headline interest rates. Sometimes those deals are only available for a few weeks.

The best interest rate may only last on a product for a year, after which it may revert to a much lower rate. So, being loyal may be more convenient, but won't necessarily pay the most. That is why it is best to review old accounts you may have set up years ago.

In fact, banks have come under heavy pressure from MPs and regulators to ensure that rates - particularly on easy-access accounts - reflect the wider market and are not just used to make excess profits.

Every basic and higher-rate taxpayer has a personal savings allowance, which means you don't pay tax on the first £1,000 of interest you earn from savings (or the first £500 if you're a higher-rate taxpayer).

Individual Savings Accounts, known as Isas, allow you to save up to £20,000 a year, and the interest is tax-free.

Large amounts held in savings can affect a claim for universal credit.

If a bank or building society goes bust, then the first £85,000 per person, per institution is safe and would be refunded.