MoneyMagpie

Nov 21

How to build up savings when you’re broke

Yes it is possible for you to build up savings when broke. I’m not saying it’s easy but whatever stage you’re at, there is help out there to get you back on track financially. Also, whoever you are and wherever you are, you have more resources than you think.

There is more and more help around for people who are broke and don’t know what to do about their money situation. The Financial Capability Strategy has a list of organisations around the country that can help people in any circumstances get their money in order. Take a look.

 

 

You’re not alone – millions are having problems

Really. If you’re struggling with money and finding it impossible to build up savings when broke you can take heart from the fact that you are by no means the only one and probably half the people you know are having similar difficulties.

New research from the Money Advice Service shows that millions of working-age people across the UK are at financial risk due to their low levels of savings.

The research, published at this year’s Financial Capability Week, showed that 4 in 10 (that’s 16.8 million) working-age people across the nation lack a savings buffer, with less than £100 in savings available to them at any time.

This means that huge numbers of people are vulnerable to unexpected bills or unplanned expenses like the boiler blowing up or the car needing a new clutch…you know the kind of things. Three-quarters of us experience at least one of these a year and, if we don’t have the cash to deal with it then and there, we have to turn to credit or borrowing from friends and family.

Here’s a map of where people have the least savings across the country (make you feel better? It kind of does with me!)…

 

How to build up savings when you're broke

 

So how do we change this situation? How do we create a lovely, fat savings buffer for ourselves?

Here’s how…

 

1. Deal with those debts

Debts can be a big cost, particularly if you have expensive loans or credit card debts.

If you can work at paying off those first, that will help to free up more money for savings each month.

So, first of all sign up to our free debt-busting emails and that will help to turbo-charge your ability to build up a savings pot.

Also, take a look at the many, many articles here on how to get help with your debts and how to get the benefits you’re entitled to.

There’s lots of free help out there and even free money so go get it!

 

2. Get help with budgeting and saving

moneymagpie_analyzing-financial-dataThe good news is that there are HUNDREDS of places you can go to get help with budgeting and managing your money like a pro.

MoneyMagpie is a great place to start as we have LOADS of information on how to save, make and manage your money. Look at this article, for a start, on how to make a budget. It’s pretty straightforward.

There are hundreds of organisations in the UK who are involved in tackling low financial capability. They make sure people manage their finances day-to-day, avoid financial difficulties and prepare for financial shocks.

The Money Advice Service is one of the organisations that can help. Also your local Credit Union (see here for a website to find one near you) and Citizens’ Advice Service. You could find that your local church will also help through Christians Against Poverty.

 

3. Cut the cost of living

This is where you can really build up savings when broke. The small savings you make on daily costs will build up to give you extra cash each week that can be put aside for a rainy day.

  • brokeThe easiest way to make a dent in your outgoings is to cut your utility bills – so see if you can’t save money by switching providers. With energy price rises, your fuel bills are a good place to start. Check out our energy comparison page. You should be able to save at least £200 a year simply by switching your energy provider, so you owe it to yourself to check.
  • You can also use our comparison tables to quickly find cheaper car insurance, home insurance and travel insurance as well as cheaper broadband. These are all regular bills for which you may well be paying over the odds for.
  • Then cut down on your general spending. If you don’t know where your money is going each month, keep a spending diary for a few weeks – you’ll soon find out!
    • Start with just one thing that you’ll cut down on – perhaps you buy a coffee every morning on the way to work? Replace that with a travel flask or cup of your own brew and you’ll save about £12.50 a week.
    • Bring sandwiches to work instead of buying them or have one less takeaway a week. All these things add up and cutting back on them will free up a lot of money.

For loads more ways to cut your spending, read our article on reducing your outgoings and find out how you can save over £1,000!

 

4. Find money you didn’t know you had

Check out the brilliant website Mylostaccount, which will search for any dormant accounts you might have forgotten about.

And don’t forget other financial products you may be missing out on. Our article on how to get free money has links to services like the Pensions Schemes Register, which will find any old pension schemes you set up with previous employers.

There’s also the Unclaimed Assets Register which covers all manner of investments, life policies, shares, National Savings and others.saving when broke

They charge a small fee of £25  but it’s worth it. They’re also partnered with the Halifax to help current and former Halifax members find old savings accounts quickly.

While you’re at it, why not pull the cushions from the sofa and check in pots, on shelves and under boxes around your home to see if you can find any spare coins.

According to Visa UK, Britons collectively have £1 billion of loose change just lying around!

 

5. Set a savings goal

This is a great way to build up savings when broke. If you set yourself a goal you will concentrate on that figure and you will look around for ways to get to it quickly.

We’re all at least a bit goal oriented so you can ‘sneak up on yourself’ by setting a goal, writing it down somewhere and even giving yourself little rewards when you get to milestones in that goal.

Let’s say you set yourself the goal of collecting up £1,000 in savings. Every time you get another £100 you can take yourself out for tea or reward yourself with a little luxury something (no more than £10 please) from a cashback site like Quidco.

Use the savings calculator at the Money Advice Service website to help yourself reach your goal!

 

6. Save coins in a jar

This is a great way to build up savings when broke. It’s easy because you just do what you used to do when you were a kid – stick coins in a piggy bank or jar.

Pick a coin – any coin. It could be £1 coins, £2 coins or 20p coins. Whichever you choose, you have to save any coin of that save money when brokedenomination you have left at the end of each day. Get yourself a piggy bank or a special jar that you empty your coins into regularly.

A lot of people use this method of saving for things like a holiday or Christmas. It’s a great way of gradually accumulating money, without it hurting your purse too much.

However, it’s also a good idea to empty your coins jar every month and put the money into a high-interest savings account. That way you can start making interest on it and, hopefully, take away the temptation to raid the jar!

 

7. If you’ve got it, rent it (or sell it)!

What have you got hanging around the house that could make you some money?

If you have a spare room, you could rent it out for cash (even if it’s on a part-time basis). It can bring in thousands of extra pounds a year – and the first £7,500 you earn from a lodger is tax free!

So if you want to make the most of that spare room, have a look at Easyroommate – it’s free to post an ad. If you don’t want to commit to a full time lodger, check out MondaytoFriday.

Then there’s Airbnb where you can rent out a room or your whole home to tourists or business travellers on a per-night basis. Even if you’re not in a particularly touristy area, you could find that people need to rent a place to stay where you live in order to visit friend save money when brokes and family or have a business trip. It can be very good money.

You can also make money by renting out your driveway. Try JustPark to make money while you’re out at work!

Alternatively, you could set yourself the task of clearing out all your unwanted junk and selling it on. Get selling on eBay and don’t worry if you are completely new to it – find out how to sell things on eBay here.

You could also try posting an ad on Gumtree in the ‘For Sale’ section, or checking out some online car boot sites like Boot Bay. For loads more information about car boots, have a look at our article on how to turn your trash into cash.

 

8. Set aside time to make money

savings when brokeInstead of slumping in front of the TV every night, how about setting aside just one evening a week to make some extra cash to save?

Try spending a few hours in front of the computer one night just doing online surveys, or you could even make cakes and sweets to sell at a car boot sale each week.

Take a look at the ideas in our Making Money section for any that match your circumstances. Basically, the extra money you make in your spare time can be earmarked to build up savings when broke…soon you won’t be broke anymore!

 

Where to put your money

For short-term savings – that’s savings for a rainy day – you’re best off putting the money in a nice safe savings account. You can see the best ones here.

If you make money over the internet, move it straight into an internet-based savings account as soon as you get it. If it’s cash, put it in an envelope and deposit it in your savings account immediately to stop yourself spending it on treats!

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Comments

5 thoughts on How to build up savings when you’re broke

  1. Great advice as ever. Plus, once you have set some money aside, you can put it to good use for earning a regular second income

    Reply
  2. Things like switching off the lights when you don’t need them, turning off TV, when you are not watching, growing your own vegetables etc., sound very simple and easy, but they help a lot on cutting your cost of living and you would be doing your part in saving environment. Thanks for the article!!

    Reply
  3. Jasmine you are so hot, you’ve saved me so much money and I have to confess I am actually In Love with you. xxxxxxxxxx

    Reply

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