How to Start Saving When You Can't Afford To
Everyone has a different reason why they struggle to save money…
In this article we’ve gone through the most common reasons so you can finally get started with saving, even when you think you can’t afford to.
What do you need help with?
Click on the below to be taken to the relevant part of the article.
How much can I afford to save?
Forget about what you think you should be saving. Start with what your budget says you can realistically afford.
The Budget Planner powered by Money Helper can help you work through your income and regular spending, from bills and food to travel and debt repayments.
Once you've covered your usual costs, you can look at what's left.
You don't have to start big. Start with what you can afford, then increase it when you can.
Maybe you can afford £25 a month. Maybe it's £10. Maybe it's £5.
That's your starting point.
If you want to see how £25 can snowball into a large savings pot, read our recent article: Is Saving £25 a Month (Or Less) Worth It?
Don't choose an amount that leaves you short later in the month. Saving £10 consistently is better than trying to save £100 and having to take it back out.
How to stop dipping into your savings
Already saving but keep transferring the money back into your current account? The solution may sound simple, but here’s what you need to do:
Try keeping your savings separate from your everyday spending money.
FCA research found that 31% of people who opened a savings account did so to keep money somewhere it wouldn't be spent.
When your savings aren't sitting alongside the money you use for bills, shopping and day-to-day spending, there's less temptation to dip into them.
Money Helper also recommends naming your savings pots to help to give your savings a specific purpose.
Instead of simply having a pot called "Savings", try:
Emergency fund
Christmas
Holiday
Car
Home improvements
Keep forgetting to save? Make it automatic
FCA research found that among people using automatic savings apps like Plane Saver Credit Union, 24% said they saved more as a result, while another 24% said they liked not having to think about saving.
Set up a regular payment so your chosen amount goes into your savings automatically, ideally around payday.
That way, you don't have to make the decision every month.
Choose your amount. Set it up. Let it happen.
If your employer offers payroll saving, you may even be able to save directly from your salary. Check with your HR team or line manager to find out if this available at your workplace.
Can you save if you’re in debt?
Having debt doesn't automatically mean you should stop saving.
If you're paying interest on a loan or credit card, paying it off sooner can mean paying less interest overall (depending on the terms of the loan).
But having no savings can leave you with no financial cushion when an unexpected expense comes along.
If your budget is tight, you should consider reducing the amount you save to as little as £25 a month, so you can maintain the habit of saving while prioritising your debt repayments. You can do this through automated payments or, alternatively, with a Save As You Repay loan, which can help you build up savings alongside your loan repayments, giving you a way to create a financial cushion while continuing to repay what you owe.
Your decision will depend on your borrowing, interest rates, repayments, existing savings and overall budget. We've looked at this in more detail in another blog:
How to increase your savings
Already saving regularly?
You don't need to make a huge jump.
Small increases can add up too.
Try increasing your monthly payment by £10.
That's another £120 a year going into your savings.
In ten years that’s an extra £1,200.
You can increase it again when your circumstances allow, whether that's after a pay rise, when a regular expense ends or simply when you find more room in your budget.
Start saving with Plane Saver
Plane Saver can help with the practical side of saving. You can save separately and meaningfully in our named saving pots, set up automated savings deposits, and earn interest in accounts like our Cash ISA.
You don't need to wait until you have lots of spare money.
