Did you know that almost a quarter of Brits don’t put any of their monthly wage into savings? Research by Lowell also revealed that 12% of Brits spend up to 30% of their wages in the first week following payday.
Due to the rising cost of living, the importance of having some form of safety net and brushing up on money management skills is more important than ever.
The below guide breaks down the top tips on how to save money. Keep reading if you want to find out more.
the cost of living crisis: what it means for you
It is becoming much more difficult for the average British family to make ends meet because the cost of living continues to rise. It’s been reported that food prices rose at their quickest pace since 2008, as overall inflation remains near a 40-year high.
We recently asked over 600 visitors to our website if they would consider taking, or have taken a second job to pay for the increased cost of living - 55% said yes. This gives a clear indication that times are tough and the average worker doesn’t feel comfortable living on a single income.
According to the Office for National Statistics (ONS), which canvassed public opinion of nearly 5,000 UK households between 14 and 25 September, a staggering 91% of adults have reported an increase in their living costs compared with a year ago, while nearly three-quarters (73%) say that costs have become more expensive in the last month alone.
The report highlighted that 44% of adults who were responsible for energy bills, and 28% responsible for mortgage or rent costs, were finding it ‘very or somewhat’ difficult to make the payments.
Rising prices have created a cost of living crisis because few families are saving money from their monthly salary - just one in three people in the UK has less than fifteen hundred pounds in savings, which might not be enough to get by if an emergency arises. It’s time to take action.
budget money before you get paid
There are many different ways to budget money. Some people prefer to keep track of their budget by writing down in a notebook how much money they're making and how much they want to save. Others prefer to use popular budgeting apps to keep track of their finances. You also might be interested in creating a spreadsheet for salary budgeting, if you’re more of an excel/sheets kind of person.
Regardless of whichever method you choose, keep track of payments that you make to yourself, such as deposits into your savings account.
You should also keep track of your basic needs, such as paying for food, transportation, and home utility costs. Try to then make a plan to save money from your salary by writing down a monthly saving goal.
Once you've done this, create a budget for things that are important to have but which are not essential. Try not spend money on these things unless you still have enough left over from your monthly pay after putting money into savings.
A good way to work out how much to allocate to needs, wants and savings is by following the ‘50/30/20 rule’.
- The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do.
- The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.
If you’re still feeling like you can’t budget sufficiently every month, you could always consider making a career change. Our career changes hub provides all of the information needed about taking that first step into the unknown.
Access the information and watch the real-life video case studies here.
how to save money fast: set up a direct deposit
It doesn't need to feel like a chore when you are saving money. All you need to do is set up automatic withdrawals and transfers to move as much as you can afford between your current and savings accounts - taking that manual admin out of the way.
Most banks allow their customers to allot a certain percentage of their monthly salary into savings accounts. This will make it much easier to start saving money. Some money-savvy experts advise to set up a disposable income account to transfer money to at the start of the month which is to be allocated to hobbies and activities (as per the 50/30/20 rule). Once your disposable income account is nearing its end, you know it’s time to cut back on social spending and non-essentials.
how to save money tips: track your spending
Many people fail at budgeting because they don’t know how to keep track of their spending. By tracking your spending, you will have a better idea of how much of your monthly salary is being spent on essentials, hobbies and must-haves.
Consider reviewing your spending patterns over the past several months. You might find areas where you can reduce spending in order to prioritise saving money every month. There are plenty of spending tracker apps out there, or as mentioned above, a trusty spreadsheet or notebook will also do the trick.
Quick money saving tips
- Dropping your thermostat 1 celsius can save you up to £234 a year
- Air drying your clothes not using the tumble dryer can put up to £80 a year back into your pocket
- Your oven will cost you typically four times more than other modes of cooking. Try using microwaves, air fryers and slow cookers.
- Ditch the TV channels you don’t actually ever watch, or settle for freeview
- If you’re using the gym for cardio only, try outdoor running and walking
- And of course if you ignore the coffee purchase every day, at £3.40 on average in the UK, that’s £816 saved across the 240 working days, so you can call that a pay rise of over £1,000!
reduce your expenses
People tend to spend the majority of their monthly salaries on costs related to transportation, groceries, and housing. If you can reduce your costs in these areas, you will have more money to put in savings every month. Always use cost comparison websites to ensure that all of your policies are up-to-scratch. Many of us are guilty of renewing the same policies every year without investigating if there’s a better deal elsewhere.
create roadblocks for online shopping
It is easy to spend money online because so many retailers have on-click buying options. This means that it can be difficult to avoid buying on impulse. Amazon for example makes it incredibly easy for you to make purchases at the click of a single button.
You can make it more difficult to buy items online by not saving your credit card information.
Whenever you want to buy something, you will need to fill out these details. This will give you the opportunity to slow down and ask yourself whether or not it is a wise financial decision to purchase this product or service.
make use of top tips to save money
If you've been wondering about how to save money, it is important to understand the importance of creating a monthly budget.
If you're looking for a new job to make it easier to save money every month, we can help you. Don't hesitate to contact us today and let's discuss your situation.
If you find yourself struggling to keep up with your expenses and are worried about the cost of living, it’s worth talking to Citizens Advice for official guidance.
Or if you're looking for a new role that will give you the financial boost you need, get in touch. We'll be happy to help.