Saving Money With A Small Income

Guest Post | It’s been a while since I’ve published a blog post about finances that isn’t blog related. Today I have a guest post from the lovely Em on how to save when you have a small budget. If you enjoy this post be sure to check out her blog!

Whether you’re a student, young adult or parent, you’ll always need to save money for something. Houses are going up in price, and holidays are on our minds with the summer on its way. 

It seems that everything has gone up in price since the lockdown. Many of us are still furloughed or living on a reduced wage. It can be hard to save money as it is, let alone with a smaller income than usual. 

Sadly, house payments are still due, and food needs to be put on the table. Here are some of the best ways to save money with a small income, so you can afford to do the things you want, rather than just the things you need!

Create A Budget That Works For You

Budgeting is a word that many people hate. Budgets can be a lot of work to sort out but can help you save a lot of money. To budget, you use a spreadsheet or put cash in envelopes each month. It can be difficult to put money aside if you aren’t confident where your money is going. Budgeting is a great way to keep your finances organised. 

To budget simply, all you’ll need is a piece of paper and a pen. At the end of the month, you should estimate your income and write it at the top of the page. Then, write down all of your utilities and other expenses. This includes food and monthly subscriptions. Take away these amounts from your wage, and you’ll have your spendable cash figure. 

If your figure is reasonable, you can put this straight into a savings account. If you’re not happy with how much money you’re left with, now you have a list of all your expenses. Work your way through the list and work out what you can cut down on or completely cut out. Further down, I talk about some of the ways you can reduce these! Budgets allow you to be smarter with your finances. They’re a useful tool for saving money!

As part of your budget, you can also create a section dedicated to your hobbies, as these must also be budgeted for, including unnecessary expenses that bring you joy, such as ordering a coffee from Starbucks or playing online games. As long as these are strictly budgeted for, you can still enjoy them within reason without worrying about money. For instance, you can assign a monthly budget to it. You can also use external controls to limit your spending, such as setting limits on the time and money you spend on Pay N Play sites. They also belong in a budget that works for you and your lifestyle.

Set Up A Limited Access Savings Account

Before you start saving or making money, you’ll need a savings account. I have limited access and unlimited access accounts which I use for different things. If you’re prone to spending your savings, it may be worth applying for a limited access account so that you aren’t tempted to spend your money! 

A limited access savings account may have a higher interest rate, so it can help you to increase your savings over time. They also will only let you withdraw money a certain amount of times in a year. My account allows me to withdraw cash every quarter. 

Start Making Money On The Side

Now that you have a budget and savings account, you need to start filling it! One of the easiest ways to save money with a small income is to have a side hustle that gives you enough money per month to put into a savings account. I have a whole blog post on easy ways to make money on the side! Making money on the side has helped a lot of people to save more with their small income. It also gives you a bit more flexibility in your budget. 

Making money on the side is easy to do, and you can control how much you make. You could sell your old clothes, fill in surveys or even participate in market research. There are lots of ways to make money on the side. Not only does this make your budget healthier, but you now have extra cash to put into savings. From my side hustles, I have saved enough to put a deposit on a house at 18!

Lower Your Living Expenses

There are a lot of living expenses that don’t need to be as high as there are. Get quotes from other energy and water suppliers. If you’re happy to move, then do so. If not, see if your current supplier will match the price for a loyal customer. My household has done this a few times, and we have halved our costs and even got a free Wi-fi box upgrade! You’d be surprised at how much you can knock off of your bills just by asking.

Before you ask your supplier, you need to make sure you have quotes on hand. You want to be able to negotiate confidently rather than just reading estimates off of a website. It’s also better to know what sort of price you could be looking at. You want to make sure you get a good deal for yourself, not just something they offer every customer. 

Related: How to manifest your financial goals + affirmations

Be Mindful Of Your Spending

Spending £10 here and there adds up really quickly. Be mindful of where your money is going and what you’re spending it on. You can look at mindfulness in a few ways. The first one is to know where your money is going. You can’t save money if you’re not sure what is coming in and out every month. Keeping an up to date budget can help you to see where your money is being spent. It can then help you to cut down on certain spending habits. When you see how your money is being spent, it can be quite an eye-opening experience. Sometimes you don’t realise just how much you’re spending!

The second way you can be mindful is by thinking about what you’re spending your money on. If you go to the shops and buy the first items you see, you may regret those purchases later on. Try to consider your purchases before you buy them.  For personal and expensive items, I like to wait 30 days before buying. It gives me a chance to think about the purchase and cut down on impulse spending. Or, I only buy things for myself when I have a coupon code to use. For example, websites like Raise supply discount codes for many different shops, which are helpful to use when purchasing something quite expensive. Don’t just buy the first item either! To save some money, shop around to get the best price. I’d recommend installing Honey on Chrome. It gives you discount codes and cashback. Topcashback is also beneficial for making some money while you spend!

Buy Throughout The Year

Christmas comes at the same time every year. So do birthdays and other seasonal events. To save money with a small income, you should buy gifts and cards throughout the year. Start planning for Christmas early and make the most of the sales. Not only will you save money in the sales, but you spread out the cost. It’s like buying a car. It’s easier to pay £200 every month than a lump sum of £15k.

If you don’t have the space to purchase things every month, you could save what you would have spent and do a big shopping trip. You may not benefit from the sales, but you will have a healthy shopping budget if you start a year early. If you put away £25 every month, you should have enough to purchase gifts for everyone at Christmas. Make sure you have a separate budget for Christmas! 

Try To Eliminate Debt

It’s hard to save money when you have debt lingering. Where possible, pay off your debts. I only use a credit card for building a credit score, so anything I spend is in my bank account, ready to pay back. If you can pay for something with your current account, do it instead of using credit. Credit is good for some things, but when you’re saving up on a small income, you don’t want £200 coming out every month on debt repayments. That money would be more beneficial in gaining interest in a savings account! If you’re looking for tips for paying off your debt.

Reconsider Your Entertainment Spending

I love my Netflix subscription and having the opportunity to get things the next day with Prime. However, when you’re trying to save money, some of those need to go. Take a look at any subscriptions you have, and see where you can make cuts. Netflix, Prime and now Disney+ have shows that overlap. Grey’s Anatomy is on both Prime and Disney+, but I like having next day shipping, so I’d cancel the Disney one. If you don’t watch one of the services for a while, it might be time to cancel it. The beauty of subscriptions is you can get them back whenever you need them.

If you can, try to swap subscriptions to cheaper alternatives. Spotify is £9.99 a month, which is quite a lot. If you include your shows, magazines and other subscriptions, it all adds up quickly. When you’re on a budget, stick to the basics or ones you use the most. If you can share with someone else, that may be beneficial. My family all split the cost for joint packages. Many also offer a student package for those eligible.  

No matter what income you’re on, you should always put money aside each month. Saving money on a small income can be hard at first, but when you organise your finances and evaluate your expenses, it becomes a breeze! What are you saving up for? There are so many ways to save money. I’d love to hear about what you’re doing to save money with a small income! 

If you enjoyed this post head over to How Can You Pay For Your Gap Year Travel Plans?