Saving is essential for everyone. The knowledge of saving on low income quickly builds up a financial buffer to help you protect from debt. Savings reduce the dependency upon the credit cards and other debts. The numbers of readily available personal loans even for the low credit score holders become a trap for long-term forcing the borrower the pay the instalments for year after year. The habit of saving is more important than how much you save.
Average Brit’ Saving Falls:
Only 67% of 35 to 44 years old British households have more than £100 in saving the account. According to a report by Finder, the numbers of UK people having more than £100 in saving account are falling. The numbers of 55 to 64 years’ old households having more than £100 as saving fell 12% in 2017; just 74% of people have £100 in saving the account. Only 66% of 35-44 years’ old people have more than £100 saving. Why do people in the UK fail to save?
The Financial Conduct Authority’s survey on the UK’s households founded that 4.1 million people are facing financial problems caused by falling behind in bills payments and credit card dues; the people with 25- to 34-years’ age were found the most over-indebted. FCA’s Financial Lives survey over 13,000 consumers painted an alarming picture.
The significant reasons found for failure in saving at low income were:
17% Brits struggle if the monthly rent is increased even by £50 or less.
40% UK population is confident of getting financial help from financial service providers.
People tend to treat the credit card as income.
Majority of people pay high for the items that they don’t really need.
Numbers of people borrow just because of another borrow.
Confusion with “wants” and “needs”.
Improper salary hike in comparison to the inflation rate.
Higher living costs just because of following the latest trends to make life comfortable.
Can you save even at low income? Yes, you can also save while earning low to feel free from:
Forces that drive you into debt
Factors that negatively affect your daily happiness & wellbeing
Thoughts that fail the early retirement plans
Stresses of managing daily living expenses
A sense of feeling powerless
How To Budget and Save With Low Monthly Income:
Saving has been my prime concern since my first earning. Although at the start, I couldn’t save much because of low income but whatsoever it was, it was consistent. Being faithful with little saving to be joyful much was my mantra.
- Cut down your most significant expenses: Instead of cutting back small regular expenses, focus on cutting down the more considerable expenses to make a substantial impact.
- Leverage the advantage of free money: Plan to reduce the taxes on income. The large refund on taxes helps you see more than what you earn.
- Keep the budget lean: To save at low income, you have to control spending. Choose the particular categories you can indulge in while keeping the rest of the monthly budget lean as much as possible.
- Pay high-interest debt: Managing the high-interest rate debts with priority should be the prime aspect of monthly budgeting.
- Structure the expenses: Budgeting guides you to spend fix amount for particular regular needs. Reduce the heads for spending by eliminating requirements that can be postponed.
- Take advantage of online deals: a Leveraging advantage of online deals is a feasible way to earn. The numbers of e-commerce platforms offer better deals for the products that you mostly buy from the local market at a higher price. Even some deals come with an offer of free dinner for two.
- Cut the categories a little: Categorization is base of budgeting. Instead of removing the entire category for saving and to feel difficulties in ordinary living, better you slice the expenditure limit smaller. Entertainment, going out for dinner, inviting friends at home and fueling the car like several categories have scope for partial spending.
- Switch to a cash payment for daily expenses: The habit of digital payment often leads you to cross the budget limits. Use of credit cards often invites the debt secretly. When you pay cash, you have an additional sense of spending, so you try to spend less.
- Reduce accommodation cost: Just think, do you really need as much big house to live at such a high cost to be paid each month? Renting is the most commonly found hurdle in saving at low income. Reduce the extra unusable items in the house and plan to manage the living in a smaller home.
- Reduce transportation cost: Transportation cost is rising up continuously; mainly, if you are using your car. Taking a home near to workplace and school of kids can reduce the monthly expenses. The habit of using local transport is also a good habit of saving big.
- Cut on holiday touring: Everyone wants a break from regular working style to relax. I don’t say that you should not go for an outing, but if you are on a low income, you can plan picnics at nearby places instead of paying high airfares.
- Work from home to earn extra: Earning is the only way to save more. Working from home in spare time is a decent way to pay the high-cost debt and high-interest rate credit card bills earlier with extra income. Using spare time for earning reduces the monthly expenses that you often make on going out to clubs with friends.
- Consider changing the energy supplier: Not all the energy suppliers offer the same prices and packages; therefore, a comparison of available options can help you save up to 1000 £ a month. Plus develop the habit of energy saving.
Saving is a task for the entire family members; never limit just to self. Share spending limits with each family member. Share the reason for saving more because the goal-oriented task has more chances of success. Earning is the base of saving. Do not limit the saving potential just because of low income. Explore the opportunities to earn more in parallel.