Do you find yourself living from paycheck to paycheck every month? You’re not alone. According to the RSA (the Royal Society for Arts, Manufactures and Commerce), a staggering number of Brits – about 25 million people – are financially vulnerable.
In fact, a survey by the housing charity Shelter and YouGov revealed that close to 40% of UK households are just one paycheck away from financial ruin. And while coronavirus has prompted Brits to save more than ever before, millions of Brits still have no savings at all.
While it might seem impossible to save when you’re living from paycheck to paycheck, there are things you can do to jumpstart your savings.
Can I save if I’m living from paycheck to paycheck?
If you can barely cover your basic bills, it might seem impossible to save anything. But you might be able to ‘find’ money if you look at your finances more closely. In fact, saving for an emergency fund is the only way to make sure you don’t get into more debt and can eventually stop living from paycheck to paycheck.
One way to start saving is to claim all of the benefits you’re entitled to so that you can free up more cash. For example, you might qualify for Support for Mortgage Interest (SMI), housing benefit and Universal Credit to cover some of your housing costs.
There are also energy-efficiency grants and a range of other benefits if you’re disabled, have a child or are retired.
Check the Money Advice Service website for a list of entitlements you might be able to apply for.
How can I start saving if money is tight?
So, how do you get started when funds are tight? Small financial changes can bring big results over time if you’re consistent.
Work out a budget
Even if it seems impossible, there might be ways to reduce your expenses so you can save. But you won’t know until you write down your income and expenses and take a closer look at them.
Many people who live from paycheck to paycheck have already eliminated all luxuries. But you might find ways to save more by reducing your grocery spending or switching utility providers.
Increase your income
If you’re not making enough to put some money aside, look into ways to earn a little extra cash. You could sell unused stuff from around the house, freelance online through platforms like Fiverr or see if you can find a part-time job on the weekends.
Try a savings challenge
Having a hard time getting started with saving? Try the 52-week savings challenge or the penny challenge, where you put an increasing amount of money aside every day.
Savings challenges are a great way for people living from paycheck to paycheck to save. The challenges feel like games and begin with easily achievable goals. The aim is to get you excited about saving and push you to form saving habits.
Can’t afford to save that much? Until things get better and you’re no longer living from paycheck to paycheck, consider microsaving. Putting £1 or less aside every day might not seem like much, but it’s better than no savings at all.
