How to save money when you’re struggling to make ends meet

If you’re struggling to save money each month, you’re in good company. Research shows that almost a quarter of people in the UK have no savings at all (23%), rising from 20% in 2022. After paying your mortgage or rent each month, credit repayments and essentials like energy and food, saving for bigger goals like a new house or your retirement might seem like a pipe dream.

Conventional wisdom amongst financial planners is that saving enough money to cover your living costs for 3-6 months should be your savings priority. Doing so, they say, will “protect you from things like a sudden loss of income or emergency medical costs”. In the current climate, where inflation is high and economic growth is low, this is perhaps more relevant than ever, with almost half of people in the UK worried about losing their jobs as the task of saving becomes more difficult.

But while saving for a buffer to guard against all the unexpected things that life might throw at us is a good idea in theory, it may not be practical for many people right now. But don’t give up! The trick to getting started is focusing on what you can do rather than what you can’t – here are our top tips.

Pay yourself first – and no amount is too small

As with any journey, you need to take the first step. Saving is no different. Even if it’s just a few spare pounds, try to get into the habit of putting aside something each month. It’s never too late to do this, even if you’re starting your savings journey later in life.

However, some people find that once essential outgoings are taken into account each month - from rent and utility bills to credit card repayments and the costs of running a car - it can be easy to put off saving.

That’s why it’s important to pay yourself first by moving a portion of your income into a savings account as soon as you’re paid. This doesn’t mean that you have to secure a salary raise at work or commit to an austere budget to start saving. It doesn’t have to be a lot – after you’ve worked out how much you have to spend on essentials like groceries and bills and have factored in any other expenses like repaying any high-interest debts you have, putting a small portion of your income into savings makes all the difference. The amount you’re able to contribute might vary each month, but it all goes towards providing you with some financial breathing space, and your future self will thank you.

Try a ‘no-spend’ month

If you’re struggling to save, another thing you can try is a ‘no-spend’ month – challenging yourself to only spend money on bills and real necessities for 30 days to catch up on your savings.

This doesn’t necessarily mean denying yourself year-round all in the name of saving, but it can be a powerful way to jumpstart your savings and may help you to better establish the difference between ‘wants’ and ‘needs’. Cutting down on ‘wants’ can help you to build up your savings towards a big financial goal, like erasing your credit card debt, or saving towards one of life’s big goals, like retirement or purchasing a home.

Try to make saving money a creative challenge

When you’re doing everything that you can to set aside income each month towards your savings goals, you may feel at a loss when it comes to the savings guidance you read online.

This is where it can pay to get creative with your finances – assess your usual expenditure to see where you can make clever swaps and savings. For example, shopping around for the best prices, rather than buying groceries from one supermarket, or walking more to cut down on your transport costs could help you make big savings each month.

Anything you can set aside each month matters, and making these substitutions can make all the difference when you’re struggling without needing to feel like you’re missing out.

Get some free advice

If you’re approaching retirement age and have no savings, then seeking advice is wise. MoneyHelper’s PensionWise service, offers a free 45-60 minute conversation, either over the phone or face-to-face, to anyone over 50 who is unsure about how to prepare for retirement.

From assessing whatever you have in workplace pensions to helping you work out what your state pension might be and how much tax you could be paying on your income once you’ve retired, this is an important stepping stone to starting your savings journey.

From there, you can understand more about how much money you need to put away each month and the best savings instruments to help you reach your goals. Monthly savings accounts that can automate saving and take a specified amount as soon as you’re paid each month can make this a simpler task, while tax-efficient accounts like ISAs can help you make your money work harder.

Every little helps

The high cost of living means that things are more difficult for everyone at the moment, but don’t get trapped in the mindset that you’re not saving enough. Recognising that every penny counts when you’re saving towards your financial goals is a game-changer and will ensure that you stay on track in the long term.