Three Steps to Save £1,000 on a Low Income

Saving money when you are on a low income can seem impossible, especially with the current cost of living crisis. However, there are certain things that you can do to help you save money, even if you are on a low income.

Set your saving intention

Studies have shown time and time again that you are more likely to achieve your goals if you write them down. It is also important to make sure that your goals are SMART goals (Specific, Measurable, Achievable, Relevant and Time-Bound). So for example, you could write down a money-related SMART goal such as “I will save £1,000 by 1 December 2024”.

The goal needs to be realistic. Work out how much you can afford to save by adding up your essential outgoings and then deducting them from your monthly income. There is no point trying to save £10,000 in one year if your disposable income is £5,000 per year. Break the savings goal down into smaller monthly goals, so for example if you wanted to save £1,000 per year you would need to save £83.33 per month, or £2.74 per day.

I also find that it helps to explain why you want to save the specific amount of money, because if you have a reason behind your goal it will help to motivate you when you face obstacles.

Automate Your Savings

Treat saving money like a non-negotiable bill, and always pay yourself first! Set up a direct debit to your savings account so that as soon as you get paid, the money is whisked away from your current account into a savings account. This will help to stop you from seeing the money in your account and thinking that you have money to spend on unnecessary items.

If you struggle with dipping in and out of your savings, as I have done in the past, create a new account that does not have internet banking, and cut up the card, so that you would need to actually go into the branch to withdraw the money. This will prevent you from dipping in and out of your savings on a whim.

The account that I use for my savings is a Moneybox Cash ISA, which pays 5.09% interest, and because it’s an ISA, all gains are tax free!

Cut back on unnecessary spending

Try to cut back on all unnecessary spending to ensure that you have enough money per month to save. Some easy things you can do include:

• Don’t buy coffee from coffee shops

• Make packed lunch rather than spending money on convenience food

• Shop around when it’s time to renew your insurances

• Cancel Amazon Prime

• Look through your direct debits to make sure that everything you are paying for is giving you value - if not, cancel them.

• Have a games night at home instead of going out for dinner.

• Limit alcohol consumption

• Have regular no spend days/weeks/months.

If you follow the above steps, this should help you towards your goal of saving £1,000 per month on a low income.

Camilla x