If You Can Pay Back £100 a Month for a Loan, That's The Amount You Can Save Aside

May 8
5 min read

Think about the last time you considered taking out a loan. You worked out what you could afford to pay back each month — and that number? That's exactly what you could be saving for yourself instead.

Here's a thought. When most of us look at a loan, we go through a bit of a mental checklist. Can I afford £150 a month? Could I manage £200? We work it out, we're comfortable with the number, and then we hand that money over to a lender every single month — often for years.

But what if you paid it to yourself instead?

That's the simple idea behind this. If you've convinced yourself that you can afford to send £150 a month to a bank, then you already know you can live without that £150. Which means you could just as easily be putting it into a savings account — and keeping every penny of it.

"A loan payment goes to a lender. A savings payment comes back to you including the interest"

Now, we know life isn't always that straightforward. Sometimes you need a loan because something unexpected happens — a car breaks down, a boiler packs in, the washing machine gives up the ghost. We get it. That's what credit unions are here for.

But for a lot of people in this area, loans are taken out for things that could wait — a holiday, new furniture, a bit of extra breathing room at Christmas. And that's where this idea really matters.

Let's look at the numbers

The average full-time salary in the North West of England sits at around £32,000 a year — that's roughly £2,100 a month take-home after tax and National Insurance. Let's see what that looks like against a typical personal loan.

A typical personal loan — UK average

Loan amount borrowed £5,000

Loan term 3 years (36 months)

Typical interest rate (APR) ~12–15% (Higher credit score)

Monthly repayment ~£166/month

Total paid back ~£5,976

Interest paid to the lender £976 — gone forever

So £166 a month, for 36 months. That's the payment most people would say "yeah, I can manage that" to. And they do manage it — because they have to.

Now here's where it gets interesting. What if, instead of borrowing £5,000 and paying back £5,976 — what if you just saved £166 a month for the same 36 months?

Saving £166/month for 3 years is £5,976 saved That's the full amount — and it's yours, not the bank's.

Same monthly amount. Same three years. But instead of ending up with nothing — or worse, in debt — you end up with nearly six grand sitting in your account. And if you put it in a savings account with even a modest rate of interest, you'd have a little extra on top.

"But I need the money now"

That's fair, and it's the honest objection. Sometimes you genuinely do. But here's the thing — if you start saving now, you won't need to borrow in the future. Most financial emergencies aren't completely out of nowhere. We often know a car is on its last legs, or that Christmas is coming (it does, every year, without fail).

If you'd started saving £166 a month two years ago, you'd have over £4,000 sat there right now. Ready. No application. No credit check. No interest.

"The best time to start was two years ago. The second best time is right now."

Even starting small makes a difference. If £166 a month feels like too much, what about £50? Over three years, that's £1,800 — enough to cover a lot of those "unexpected" expenses without touching a loan at all.

You've already proven you can do it

This is the bit that matters most. You've already done the hard work of figuring out what you can afford to lose from your monthly budget. Every time someone takes out a loan, they're essentially proving to themselves that they can live on a little less each month.

All we're asking is: what if that money went to you instead?

Open a savings account with us. Set up a standing order for whatever you'd have paid on that loan. Then leave it alone. In a year, you'll have a cushion. In two years, you'll have options. In three years, you'll have money that's entirely yours — with no debt to show for it.

"But what if I struggle to keep track — or keep my hands off it?"

You're not alone there. Plenty of people find that the hardest part of saving isn't finding the money — it's leaving it where it is. Checking the balance every other day, dipping in for something small here and there, losing track of how much you've actually put away. It happens to the best of us.

And honestly? That's exactly what your credit union is here for.

We're not just a place to keep your money. We're here to help you build better habits around it — at your own pace, without any judgement. Whether you need a nudge to stay on track, a bit of guidance on setting a savings goal, or simply someone to talk it through with, that's what we do.

Saving with your credit union also means your money isn't quite as easy to get at on a whim — and that's a good thing. It puts a little bit of healthy distance between you and the temptation to spend it. Not a lock and key, just enough of a pause to make you think twice.

"The best savings habit isn't willpower. It's having the right support around you."

One pot of money. Two good things at once.

Here's something that often surprises people. When you save with a credit union, your money doesn't just sit there doing nothing. It goes into a shared pot that helps other members in your community access fair, affordable loans — people just like you, in the same area, with the same everyday challenges.

So while you're building up your own financial cushion, you're also helping a neighbour get through a tough month, or helping a local family avoid a high-interest lender. That's the credit union difference. Your savings do double duty — good for you, and good for the people around you.