How to build a savings pot when you have a limited income

Saving money when you're on a tight budget can feel like a real challenge, but it’s definitely doable with a bit of planning and some smart habits. By getting a handle on your finances and making some thoughtful changes, you can start building up your savings.

Here are some tips to help you get started.

Create a budget

First off, it’s important to create a budget. Write down all your income and list out your expenses, including rent, utilities, groceries, and fun stuff like going out. By keeping track of where your money is going, you’ll spot areas where you might be spending too much. Maybe you’re grabbing takeaway more often than you realised or buying things on a whim. Once you see these patterns, you can cut back on unnecessary spending and save that money instead.

Consider automatic savings

Another great tip is to set up automatic savings. Most banks in the UK let you set up standing orders to transfer money from your current account to a savings account every month. If you time this for just after you get paid, you won’t even miss the money. Even saving just £10 or £20 each month can add up over time. This way, you’re making sure you save first, rather than waiting to see what’s left at the end of the month.

Ask for advice and utilise schemes for those on lower incomes

Take advantage of savings tools and programs available for those on lower incomes. Many UK banks offer savings accounts with better interest rates or lower fees if your income is below a certain level. There are also organisations and charities that provide free financial advice and support. These resources can help you manage your money better and find ways to save, even if your income is limited.

Cut back where you can

Living a bit more frugally can also make a big difference. Look for ways to save on everyday expenses, like using discount codes, buying own-brand products, or shopping during sales. Think about cheaper transport options, like cycling, walking, or using public transport instead of driving. Cutting down on your utility bills by using less energy and water, or haggling with service providers for better deals, can also free up more money for your savings.

In a nutshell, saving on a limited income is all about careful planning, keeping an eye on your spending, and making smart choices. By budgeting, automating your savings, using helpful resources, and living more frugally, you can start building up your savings pot. It might take a bit of time and effort, but with persistence and good habits, you’ll get there.