We all want to build our savings to cope with unexpected expenses or take off on that dream trip. But making sound financial decisions isn't always easy, especially for those on a low wage. But don’t worry — if you're looking to make your money work harder for you, we've put together some tips for budgeting on a low income.
Saving money when you're on a low income
Sometimes we all need to make our money go that little bit further, whether we're on a low income or not. But saving up can seem impossible when you live from payday to payday. If you're just trying to survive, saving may not be your top priority, but it can be helpful to think long-term. Putting even a little bit aside now will pay off in the future.
Living within your means might not sound like much fun, but think of it in terms of prioritising your spending, and you'll start saving without missing out. Luckily there are some straightforward ways to save money, even when it seems like a challenge. These budgeting tips for low-income earners can help you start saving money and work towards your savings goals.
Budgeting tips for low-income earners
Keep your budget lean
To start saving, it’s important to take control of what you spend. Whether you keep a spreadsheet or write it down in a notebook, it can be beneficial to get your budget on paper and keep all your paperwork together in a single place.
It can help to track your spending every month on essential and non-essential items. Now you can start getting your budget lean and keeping it that way. You could try:
- Using comparison sites to switch to the cheapest energy and broadband supplier
- Taking a packed lunch to work
- Walking some days instead of taking the car
- Not leaving your TV and laptop on standby
- Upping your fakeaway game to cut back on takeaways
The important thing is to get creative with your cuts and focus on the positives. For example, replacing takeaways with fakeaways will boost your cooking skills and walking is the ultimate free way to get fit and healthy. Tracking your spending also gives you valuable time to ask yourself, "do I really need this?" If you answer "no, I don't" then perhaps you can put that magazine back on the rack and cut back on the takeaway coffees.
Make friends with your calendar
It doesn't matter whether it's the one on your phone or the cute cat calendar you got for a Secret Santa. Using a calendar is an invaluable way of tracking your weekly and monthly cash flows and getting to know your spending habits. So, be honest about whether you need that gym membership or extra phone SIM. If you don't, consider getting rid of those expenses.
You could start by noting down payday and the dates of any direct debits or other regular monthly payments. It's an excellent way to pinpoint the times when cashflow is thin. You might like to try coordinating payment dates with when you get paid so you have a clear picture of what you have left to spend and save that month.
Set SMART goals
We've already written about SMART goals, but they really are one of the best ways to set realistic savings targets.
Let's say you want to save for your next car service and MOT in three months time. Take a look at your budget. Consider starting by replacing a trip to the movies with a free trial of a streaming service. Or why not get the kids involved in a competition to see who can save the most energy by switching off the lights and TV? Perhaps you could ditch that takeaway coffee for a thermos flask or a water bottle. The trick is to make your financial goals:
- Specific: for example, saving up for your next MOT and service.
- Measurable: set a goal for how much you need to save and break it into weekly chunks.
- Attainable: check your budget to see that you can achieve your goal.
- Relevant: keeping your car on the road could be a lifeline.
- Time-bound: you need to save money by the time the MOT and service is due.
When you're setting financial goals, it's also beneficial to manage your expectations. You may need to make sacrifices in terms of going out or driving to work every day.
However, you shouldn't make cuts at the expense of your children's health and wellbeing or missing that crucial meeting. The trick is to prioritise and make a complete lifestyle change. If you can manage your money effectively now, the effects will last a lifetime.
Increase your income
Boosting your income could mean taking a second part-time job or starting a side hustle online. Or you could think about selling clothes, toys and clutter you no longer need. Increasing your income could also involve finding ways to generate a passive income.
If you work in the NHS, there are several benefits you could take advantage of, including the pension scheme, bursaries and the Blue Light Card. In addition, the NHS Cashback Card lets you cut the cost of everyday essentials and get cashback while you spend. And you could also explore ways of moving into a better-paid job with more training or by gaining extra qualifications.
Prioritise your debt
Debt can hold you back from attaining good financial health and achieving your savings goals. The trick is to prioritise and tackle the high-interest debts first. Take a look at the fees and interest rates on all your outstanding debts and pay off the highest first.
You may find that saving change in jars, giving yourself weekly incentives and using any spare cash towards paying down your debt works for you. However, if you need an extra hand, then perhaps a 0% credit card or low-cost personal loan could help you keep all your debt in one place and pay it off faster.
Learning to make do with less can help you move towards the financial future you want. Of course, you'll need to have plenty of self-discipline to achieve your goal, but don't give up hope, and you'll be able to expand your lifestyle. If a fair and affordable loan from Salad Money could be part of your long-term financial plan, why not apply online today?