Saving money on a low income can be challenging, but it’s not impossible. With some simple planning you can save money fast on a low income. If you have a low income but want to save money, there are money saving tips you can adopt 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.
Once all your essential needs are covered, allocate a portion of what’s left for your savings. Put that money straight into a savings account by setting up a standing order. That way it’ll help to stop you spending money frivolously on things you can live without.
2. Use the envelope budgeting system
The envelope budgeting system is something you can do once you’ve worked out your budget plan. You label envelopes with different items from your budget. This will include things like 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.
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.
- Could you save money on your internet or TV package?
- Could you reduce your monthly phone bill?
- 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 way to save money fast
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 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.
5. Cancel your unused subscriptions
Cutting back on subscriptions and memberships can be an easy way to save money. Many of us sign up to 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. This’ll help you 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. Find out how much interest you’re paying too, then follow these simple steps.
- Find the debts with the highest interest rate. See if you can you move them to an interest free credit card or to a loan with lower interest rates.
- Next, focus on the debt with the highest interest rate. Pay as much as you can towards that debt. Pay only the minimum amount on your other lower interest debts until the highest interest debt is cleared.
- Whatever you were paying on the high interest debt, put that amount towards paying the next debt. Keep doing this until all your debts are cleared.
Using this method helps you save money on interest while paying off your debts faster.
7. Stop paying late fees
Paying late fees can be frustrating as it feels like a waste of money. But there are ways you can avoid these extra charges. The best way is to set up automatic payments from your bank account on the day your wages are paid in. This makes sure your bills and debts are paid on time, without you having to remember to pay them manually.
If you’re struggling due to your low income, talk to the lender and set up a payment plan. This will at least help avoid late payment 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.
Give yourself savings goals. By having something specific to save for, it’ll help to motivate you to save, not spend.
9. Set up an emergency fund
If you don’t have something specific to save money for, you’re less likely to commit to saving. Building an emergency savings pot is a good goal to start with. Having a pot of money to help you out with unexpected expenses can be a relief when you’re on a low income.
As a guide, your emergency pot should equal at least three times your net monthly income.
10. 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. There are things like working tax credits, marriage allowance or tax free childcare. You can save money by paying less tax.
11. 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 and 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 cheaper brands, you might find you prefer them.
12. 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.
13. 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. 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.
- 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.
- Shop online. If you can’t stop yourself when you’re in the shops, get what you need online to avoid temptation.
14. 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 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.
15. 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.
16. 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.
17. Make use of cashback schemes
Saving money using cashback websites or credit cards can be a great way to 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.
18. 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 lets you read reviews from other customers to find out how good the product is. It may take a bit of time but it’s another way to save money.
19. 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!
20. 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 also 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 mean you can cook in bulk and freeze portion sized meals. Knowing you’ve got food ready to eat will stop you picking up fast food on your way home.
21. Find ways to make extra money
There are ways of making extra money when you’re on a low income that don’t need to be hard work. If you have a spare room in your home you could rent it out. Some people move out of their home for the weekend and stay with friends while they Airbnb their home.
If you’ve got good knowledge on a brand of clothing or antiques, you could use your expertise to make money. Look for items for sale on market sites or at boot sales that are below market value, then sell them at a profit.
22. Start a side hustle
Side hustles are good for helping you save 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. And don’t forget part time jobs in shops and restaurants that 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.
Other gift ideas include baking tasty biscuits or pick some wildflowers. Wrap them in tissue and tie them with string for an authentic homemade gift. These can be more personal than a cheap shop bought item they don’t need.
24. Negotiate on 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 insurances 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 running a car. It might mean you have to walk more than you would if you used your car, but walking is good for you. Try it for a month and see how you get on. Selling your car will free up a significant amount of money that you could be saving.
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 saving 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.
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 buy 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.
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 to stop you from spending on things you don’t really need.
Final words
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.
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