Saving money when you’re on a low income can be difficult, but it’s not impossible. With the right approach, you can build savings, even on a tight budget. Here are some simple steps to help you get started.
Table of Contents
1. Create a budget
When you’re looking at how to save money fast on a lower income, creating a budget is important. Get into the details of your finances by taking time to work out what bills must be paid and when.
Once all your essential needs are covered, allocate a portion of what’s left for your savings. Set up a standing order to put that money straight into a savings account. That way, you’ll stop spending money frivolously on things you can live without.
2. Use the envelope budgeting system
Once you’ve worked out your budget plan, you can use the envelope budgeting system. You label envelopes with different items from your budget, such as food, birthdays, going out, etc. You then take out the cash and put the relevant amount into each envelope. You can only spend what’s in each envelope.
A lot of bank accounts will allow you to do something similar virtually, saving in different ‘pots’ (savings accounts)
3. Cut down on all unnecessary expenses
Take a closer look at your spending habits and be honest with yourself about what you can live without. Here are a few things to consider.
- Are there ways to save money on your internet or TV package?
- Could you reduce your monthly phone bill? You might be able to for a SIM-only deal if you’ve paid off your handset.
- Instead of buying new clothes, buy second hand. Websites like Vinted sell great unwanted items and charity shops have some good bargains.
- Cook at home instead of buying takeaways. It’s an easy (and delicious) way to cut down on money.
4. Track your spending habits
Tracking where your money goes is important if you want to save money. It helps you identify areas where you can cut back. There are different ways of tracking your spending.
- One way to track your spending is to keep a spending journal. Write down every purchase you make, along with the date, amount, and category. The categories you have might include everyday purchases like groceries, eating out and transport. Add up how much you spend on each category at the end of the month. You’ll soon see where your money goes.
- Another way to track your spending is to use a budgeting app. There are a few different ones that allow you to categorise your expenses and track how you’re spending.
- You could set up a spreadsheet to record your spending. Keep all your receipts or use your bank account to enter everything you’ve bought.
- Review your bank and credit card statements regularly to see where your money is going. It might help you cut down on non-essential purchases.
5. Cancel your unused subscriptions
Cutting back on subscriptions and memberships can be an easy way to save money. Many of us sign up for services or memberships without using them as much as we should. Sometimes we even forget we have them.
Identify which ones you no longer use or need and cancel them. This can include things like streaming services, gym memberships, and online or app subscriptions. If you have a few, this can be a way to save money fast.
6. Reduce all your debts quickly
To pay off your debts quickly, the first thing to do is to get clear on how much you owe. If you have multiple debts, focus on paying off the ones with the highest interest rates first. You may also want to check if you can:
- Transfer balances to a 0% interest credit card
- Consolidate debts into a lower-interest loan
This can help you reduce the amount of interest you pay overall.
7. Stop paying late fees
Missing payments can result in extra charges. Setting up automatic payments for bills and debts can help ensure they’re paid on time.
If you’re struggling, contact your lender as soon as possible. Many companies offer payment plans to help you avoid extra fees.
8. Automate your savings plan
To help you save money fast, treat your savings like you would a bill. Set up payments to go out of your bank account straight into a savings account. It’s an easy way to save money without you missing the money as much.
9. Give yourself savings goals
Having a clear savings goal can keep you motivated. Whether you’re saving for an emergency fund, a holiday, or a big purchase, setting a target will help you stay focused.
10. Set up an emergency fund
Building an emergency savings account is a good goal to start with. Having a pot of money to help you out with unexpected expenses can be a relief when there’s a crisis.
As a goal, your emergency pot should equal at least three times your net monthly income. This may take time to build, but if you can, it could be a huge help when it’s needed.
11. Take advantage of tax benefits for low income earners
If you’re on a low income, make sure you’re claiming all the tax benefits you can. For example, there are things like working tax credits, marriage allowance or tax-free childcare. You can save money by paying less tax.
12. Save money on groceries
Your food bill can easily become your biggest expense if you don’t plan your shopping. Decide what you’re going to eat each day before doing your weekly shop. It’ll help you stick to your food budget.
Compare prices, shop at the cheapest supermarket, and buy value brands instead of the well-known ones. Just because it’s cheaper doesn’t mean the quality is poor. It’s worth challenging yourself to try the cheapest brands that still taste as good as well-known ones. You might even find you prefer them.
13. Buy in bulk when possible
Buying in bulk can save you money. Multi-packs often mean you pay less for each item than you would if you bought them separately. You need to work out the individual price for the items to make sure you’re saving money. But it’s worth stocking up when there’s a good deal on offer.
14. Avoid impulse buying
It’s easy to get tempted to spend on things you weren’t intending on buying. Shops are very good at enticing us into parting with our cash (for example, having fresh bread at the front of the shop). Here are some tips to avoid impulse purchasing.
- Only take out enough cash to buy what you need and leave your cards at home. That way you won’t be able to spend more.
- If you’re not using cash, use a specific account for food shopping. Some banks will let you set up specific saving pots for specific reasons.
- Eat before you go out. Even if you’re not food shopping, avoid the temptation to buy a snack by eating before you leave the house. Or take a snack with you.
15. Put a spending limit on your card or pay by cash
Some banks will let you put a spending limit on your card to stop you from going over your budget. If your bank doesn’t have this option, then withdraw the cash for the things you need to buy. But don’t let yourself draw out more than what you’ve budgeted for. If you want to save money fast, keep within your spending limits.
16. Take advantage of discounts and coupons
The savings on coupons may be small but they soon add up. Of course, you don’t want to buy things just because they’re on offer. If you weren’t planning on buying the item, then you’re not making a saving. But take your coupons out with you and save money where you can.
17. Look for the best deals when shopping online
If you shop online, search for discount codes and apply them at checkout. You’ll often find you can save 10% or more on some offers. Discount code websites can tell you what’s available. The item you want might be sold in more than one shop, so compare prices to see if you can get it cheaper.
18. Make use of cashback schemes
Saving money using cashback websites or credit cards can help earn extra money on your purchases. Cashback websites give you a percentage of the price back on anything you buy through their site. Here’s how to do it.
- Sign up for an account on the cashback website.
- Browse the available offers.
- Click through to the retailer’s website to make your purchase.
- The cashback will then be credited to your account.
Similarly, using credit cards that offer cashback or rewards can also help you save money. But make sure you pay off the balance in full each month to avoid interest charges.
19. Research before making major purchases
Researching before you make a major purchase helps you in more ways than one. It means you can compare features as well as prices. That way you can choose the one that best suits your needs and budget.
Researching also allows you to read reviews from other customers to learn how good the product is. It may take a bit of time, but it’s sometimes another way to save money.
20. Sell unused items
When was the last time you had a good sort through all your belongings? There are bound to be items or clothes that are taking up space in your home that you no longer use or need.
Selling unused items is an easy way of boosting your savings when you’re on a low income. And there are plenty of marketplace sites where you can sell your stuff easily – so there’s no excuse!
21. Cook at home more often
Eating out or buying takeaways can be a significant expense. Cooking at home is not only cheaper, but it’s usually a healthier option. Plan your meals in advance and create a grocery list to stick to when shopping. And if you don’t have time to cook, try batch cooking.
Preparing your meals in advance means you can cook in bulk and freeze portion-sized meals. Knowing you’ve got food ready to eat might make it easier to avoid picking up fast food on your way home.
22. Start a side hustle
Side hustles are good for helping you make extra money when you’ve got a low income. You can make money by using your skills or hobbies in your spare time. Offering your services on a freelance basis can earn you money doing something you enjoy. Like charging to teach someone to play an instrument you’ve mastered.
If you’re not sure how to monetise your skills, you could offer other services like dog walking or babysitting. Don’t forget part-time jobs in shops and restaurants, which are often available.
23. Get creative with gift giving ideas
Gifts don’t have to be expensive to be special. Some of the best presents don’t cost a penny – like giving the gift of your time. Write out your own personal gift vouchers where you promise someone, you’ll do helpful tasks for them. You could offer things like a lift when they need it or a night babysitting their kids.
Also, talk to the person you’re giving gifts to. It might be that both of you are trying to save cash and would both welcome something personal but cheaper.
24. Negotiate bills and insurance rates whenever possible
Service providers like Sky, Virgin, or BT would prefer to keep your custom than have you cancel your account with them. Give them a call and ask if they can give you a better deal. If they can’t, shop around to see if you can get the same service for less. Put any money saved into your savings account.
The same goes for any insurance you have, such as your car insurance. When it’s due for renewal, don’t just accept the renewal quote. Ask them for a discount or shop around for a cheaper deal.
25. Use public transport or walk
If you have access to public transport, this can be a much cheaper form of travel than driving. It might mean you have to walk more between stops or stations, but try it for a month and see how you get on. If it goes really well, selling your car could free up quite a bit of cash – and it’s good for the environment too!
26. Try the 52-week challenge
The 52 week challenge is where you save money every week of the year. You start by saving £1 on week one, then add an extra £1 every week. By week 52 you’ll have £1,378 in savings.
If you think it’ll be hard to save extra each week, do it in reverse. Start by saving £52, then reduce it by £1 each week. The end result will be the same. If you can’t keep increasing, try saving the minimum amount each week and adding more when you can. It might add up much faster than you think.
27. Buy used instead of new
Cutting down on unnecessary expenses isn’t just about reducing the amount of money you spend. It’s also about spending wisely. Instead of always buying new things, consider renting or borrowing items, or buying them second-hand.
There are plenty of sales sites and apps where you can find some good bargains. Lots of people might only use something once or have unwanted gifts that they sell for less than the retail price. There are even some cheap peer-to-peer hire sites for things like camera hire, especially in larger areas.
28. Choose a no-spend day once every month
No-spend days are good for helping you think twice before you spend money. You can make it easy to start with and choose a day when you know you have no plans. For that entire day, you’re not allowed to spend any money at all.
Try building it up to one day a week. It’ll help you avoid spending on things you don’t really need.
Conclusion
Figuring out how to save money fast on a low income can be a challenge. But with a budget and a plan in place, you can make it happen.
Start by looking at where you could cut back or where you spend money unnecessarily. Give yourself some savings goals. By following personal finance tips, you’ll start saving money fast.
Remember to take it one step at a time and to be patient with yourself. Trying to save money on a low income might be slow to start with, but in time your savings will grow.
Disclaimer: The information given above is provided for reference only. This is not financial advice.