Last Updated on November 21, 2022 by HodgePodgeDays
You might not think growing your savings on a low income is easy. Indeed, it certainly comes with considerable challenges.
However, many people are growing their savings whilst earning a low income. Read on to discover our five best tips on saving for low-income households.
Develop an action plan.
To have any chance of saving on a low income, you need to develop an action plan. To understand what is going on with your finances, you should create a budget.
You might find budgets mundane are time-consuming. However, they are an excellent tool for discovering where your money leaks, hence how much you could save.
Scrutinise your budget in detail to identify potential savings. Once you’ve done this, you can create realistic goals for saving some money.
This exercise will get you away from the assumption that you can only start saving when you have more money. The key to success is identifying a sum and aiming towards that, no matter how small.
Become spending-conscious.
Your budgeting efforts should help you identify areas where you can cut back. Trimming the most significant expenses should be your priority.
Food shopping makes up a significant proportion of most people’s monthly spending. If you enjoy eating out in restaurants or having takeaways several times a week, this is an area where you can save some money.
Of course, breaking such a habit takes motivation and persistence. Remaining conscious of what you are spending is crucial. Otherwise, it’s easy to fall back into your old ways.
On average, UK households spend more than £1,600 annually on eating out. Even if you reduce that by half, you can save a reasonable amount each month.
Planning your meals and using ingredients you already have in your cupboards will also allow you to cut back on your food spending. Cooking from scratch, rather than buying processed meals, there’s another way to save.
Spending on entertainment is another area where you should remain conscious about your spending. It’s too easy to go for a night at the movies and come home with little change in your pocket. Instead, look for low-cost entertainment options such as home movie nights or free events in your local area.
Generate more income.
Having scrutinised your budget and made savings where you can, it is time to generate some more income. Doing this doesn’t necessarily mean changing jobs, as there are other ways to get a little extra cash.
A quick and easy way is to sell some personal belongings you no longer require. You can do this quickly and with a little cost on sites like eBay, Gumtree, or Facebook Marketplace.
You could be surprised at what things will sell quickly. Furniture, clothing, sports equipment, tools, and kids’ toys are all popular categories. Even making just £10 or £20 here and there means you can boost your savings.
Get out of debt.
Debt makes it virtually impossible to save. Paying interest on loans and outstanding credit card balances will soon wipe out your disposable income. Therefore, you should make eradicating debt one of your highest priorities. Indeed, it is pointless trying to save until you’ve done so.
If your debts are getting too challenging to pay, consider calling your lender and discussing how you can negotiate better repayment terms. Don’t wait until you are in trouble and start missing payments.
Establish what you want to achieve before making the call. For instance, are you after a lower interest rate? Or, perhaps, and your minimum monthly payment would be better.
If your current lender or credit card supplier isn’t open to your suggestions, consider looking for an alternative. Credit card suppliers often offer credit transfers and give you a zero-interest rate for a certain period.
Establish automated savings goals.
Taking your savings goals out of your hands works well. Therefore, consider establishing automated savings goals. Doing so means money will go into your savings account every month without you having to remember to do it.
Automating the process makes it easier for you to save. Moreover, it will help you develop a long-term savings habit without having to think about it too much. Money management and planning for the long term financial future is important. Speaking to a specialist and taking on expert advice is helpful. Check out Portafina.
Conclusion
Many people are managing to grow their savings despite having a low income. Hopefully, you can, too, with these five best savings tips for low-income households.
This is a contributed post.