Saving money is always a challenge, but it can feel especially difficult on a low income. With the cost of living rising and unexpected expenses constantly cropping up, trying to build that emergency fund, save for a holiday or home deposit, or pay off a debt can be frustrating.

But, even if you don’t earn as much money as you’d like every month, there are changes you can make that will help your money go further so you can afford to set some aside. You still might be unable to put away hundreds, but whatever you save will soon add up throughout the year.

In this article, we’ll give you tips for saving money on a low income so you can make steps towards achieving your financial goals.

The challenge of saving money on a low income

Saving money on a low income can feel like an uphill battle. With a limited amount of money coming in and an ever-increasing list of expenses, it’s definitely not easy.

Of course, before you can even think about savings, you need to cover the basics, such as your rent/mortgage, utilities and food. Then there are the unexpected expenses, debt repayments, social pressures and more.

When it comes to saving money while juggling debts, Fiona Peake, personal finance expert at Ocean Finance says, ‘Balancing debt repayment and saving for emergencies is all about finding the right proportions. You don’t have to choose one over the other—do both simultaneously. Start by saving a modest emergency fund to cover life’s surprises, then shift your focus to tackling debt. Once that cushion is in place, adopt a split approach: allocate most of your spare cash (say 80%) to debt repayments and the remaining 20% to gradually building your emergency fund further.’

While you may have plenty of financial commitments, there are small changes you can make that can have a positive impact on your finances, which means you put yourself in a position to at least save a little bit of money. And it doesn’t necessarily mean making huge changes to your lifestyle or spending habits, either. There are ways to save money on a low income that you can do with just a few tweaks which can help your money go much further. Create a free savings plan without the need to hire a money expert to get started, using tools like the Savoo savings calculator and the emergency fund calculator. Then, once you've got yourself a target, read my handy tips to start making savings even if you are on a low income.

6 ways to save money on a low income

Ready to find out how you can save money on a low income? Below are six ways you can save money even if you have limited funds each month, so you can put a little aside and grow your savings.

1. Set clear and achievable financial goals

‘Saving money’ is quite broad, so before you set out to save money it’s important to establish what your goals are. Setting a goal helps drive you in the right direction and gives you something to focus your efforts on. This could be a monetary amount or something specific, like a holiday or a new TV.

There are three types of goals you can set yourself:

• Short-term goals (0 - 12 months)
• Medium-term goals (1 - 5 years)
• Long-term goals (5+ years)

When first setting out on your quest to save money, it’s always best to start with something achievable. This can then spur you on to make bigger savings later on.

Your goals also might not necessarily be to build your savings, but to cut costs to save money on your monthly outgoings, such as food, clothing and utilities. Read expert advice from my colleagues on the Savoo blog for free advice on how to save on everyday expenses like savings tips for families, saving money on your weekly food shop, or my article on reducing energy bills. Whatever you want to do, make sure you set yourself a goal you can keep track of so you can see the progress.

Fiona Peake at Ocean Finance is a huge advocate for setting clear goals, saying, ‘Many of us fall into the trap of impulse buying or emotional spending, often driven by social pressures or the desire for instant gratification. Having specific, measurable goals can provide motivation and direction. Whether it’s saving for a holiday, a new home, or an emergency fund, knowing what you’re working towards can help curb unnecessary spending.’

2. Be smart with budgeting

Nobody enjoys using spreadsheets (and if you do, we envy you) but they’re a necessary evil when it comes to making the first steps towards saving money.

Make a list of your monthly income and all your monthly expenses. This will give you a great idea about what your financial situation looks like, as it’ll be all there in black and white. There are plenty of free online budgeting tools that can be a great place to start if you aren't great with numbers!

Once you know what you have to play with every month, set yourself a budget. Break it down into different categories, such as rent/mortgage, bills, debt repayments, food, entertainment and fuel/travel. Then, try and create a budgeting method that works for you, like the 50/30/20 rule or zero-based budgeting. Read my in-depth expert guide on how to save money for more information on the different budgeting methods.

Once you’ve set your budget, do your best to stick to it. Adapting to this change can be challenging, but it’s important if you want to stick to your goals.

3. Be ruthless with cutting your expenses

It might seem obvious, but cutting your expenses is one of the most effective ways to save money.

Use the free household budget calculator from Savoo to first figure out where your money is going every month. Then, look at your budget and see what kind of cuts you can make. If you buy a weekly takeaway, why not change it to every other week and potentially save up to £100 a month? Can you lessen your food bill by switching out some fresh food for frozen or canned alternatives (which also last a lot longer and can save you money if you have a habit of wasting food)?

For example, at Asda, 600g of fresh chicken breasts is £4.70 (£7.83 per kilogram) while 600g of frozen chicken breasts is £4.10 (£6.83 per kilogram) which is a decent saving that will soon add up.

There are also a lot of savings to be made when it comes to your entertainment. For example, if you have standard subscriptions to four of the biggest streaming platforms, it can be a big monthly expense:

• Disney+ - £8.99
• Netflix - £10.99
• Paramount+ - £7.99
• Amazon Prime - £8.99

That adds up to £36.96 per month. And there’s no way anyone can watch quite that many films and TV shows. Instead, if you rotate your subscriptions so you have just one at a time, you can save yourself around £25 per month (£300 a year!) and still get to binge all your favourite stuff.

4. Consider boosting your income

Boosting your income is a useful way to improve your finances, especially if you can minimise your spending elsewhere. Even just securing a little extra income each month can be a huge weight off your shoulders. And the great thing is, if your side hustle earns you less than £1000 in a year, you don’t need to declare it to HMRC, which means you can put it all in your savings.

The options for a side hustle are huge, and the internet means you can do it remotely and by focusing on what you love. If you like to crochet, sell some of your creations on Etsy. If you’re a keen writer, offer your services on Fiverr. Do something you can fit around your daily responsibilities and don’t take on too much and risk burning out. But, it’s something to consider if you have the time and want to bring home a little more bacon.

5. Decide what are needs over wants

Saving money on a low income does require a shift in mindset. This starts by deciding what’s a need vs a want, and then making sure you focus on your needs.

Needs can be categorised as the things you simply have to pay for, like food, shelter, clothes and utilities.

Wants are things like dining out, entertainment and vacations. Even luxury items like more expensive food and clothes can fall under this category.

Before you make a purchase, try to ask yourself these three questions:

1. Is it aligned with your priorities?
2. Will you regret not buying it?
3. Is there a more affordable alternative?

Make sure you prioritise your needs each month. However, it’s also important that you don’t completely neglect your wants. You still need to indulge in what makes you happy, just make sure it doesn’t come at the expense of you getting on track to achieve your financial goals.

6. Make the most of discounts

Whether you’re shopping for needs or wants, whatever you buy you should make sure you’re getting the best possible value for money. Yes, walking into a store or using your favourite shopping app and dropping the full price is easy, but there are also easy ways to save money if you’re savvy.

If you can, hold off buying more luxury items until the sale season. And there are plenty of sales throughout the year, so you shouldn’t need to wait too long.

Take advantage of loyalty schemes and cashback services to unlock savings and exclusive discounts.

You can also find discounts on both luxury purchases and regular expenses like food and clothes by using voucher codes at your most commonly used retailers. For example, instead of paying full price for your online grocery shopping, use voucher codes at retailers like Asda, Iceland and Waitrose. For clothes, you can get voucher codes for stores George, H&M, Next and more. Wherever you spend money, whether regularly or every now and then, you can save loads of money by using voucher codes.

Save money by using voucher codes online

Saving money on a low income can be difficult, but it’s far from impossible. One of the most simple and effective ways to cut what you spend each month is with up-to-date voucher codes when you make a purchase online.

At Savoo, we offer a huge range of voucher codes you can use at loads of your favourite retailers. Browse voucher codes today and make your first step towards saving money so you can spend less on the things you want as well as the things you need.