How To Save Money if You’re Living on a Budget

7 tips on how to live on a budget and still being able to save money

Financially, for me, this has been a challenging year.

When the first lockdown started here in the UK, I was one of the lucky ones that kept her job and were paid furlough. However, I went off sick and because of my inflammatory disease — which causes me flares of intense pain — I’m not able to do overtime as I did before.

Now, I’m only working 24 hours a week; which, of course, doesn’t pay me enough to keep me up the surface. I had to find an alternative.

Working part-time gives me lots of free time, which allowed to invest in my passion: writing. But we all know how hard it is to make money as a creative. Still, here I am, trying my way through it. I’m a believer.

Until last August, and for one year, I lived in a shared home. I hated it, but I didn’t have a choice. As much as, financially, it’s a relief, there’s nothing like having your own place, with complete privacy.

During the lockdown, I worked very hard on my writing, and it paid out. I saved money for a deposit on a new place for myself and my dog, and I bought a few things needed to start a new life. We are now living in a (tiny) studio.

Living in the UK is expensive and, living closer to London as I do, it’s even more. Rents are mentally high. But I’m doing it.

I’m a freelance writer with a part-time job, living alone in an expensive city. How do I do it? By wisely managing my finances.

It hasn’t been easy; I have strict control of my finances, and I hardly have pocket money, but I’m doing it successfully. For me, it’s reason enough to be proud.

But I’m not stopping here. My flat is too tiny (I call it “the shoe-box) and my dog can’t reach the windows, which means he can’t look outside. This was a temporary solution, a milestone. We both are making sacrifices.

I’m already working on my next goal: to move out from my tiny studio and find a bigger place, preferably with a garden, for my furry boy. For that, I have to save money.

It’s hard to save money when you’re living on a low budget, but it’s not impossible. All it takes is awareness, self-discipline, and ability to focus on your goals.

You also have to be realistic. As much as I wish to move out of my tiny studio, I know I might have to renew the lease in February.

Your financial planning should be a realistic one, including the extras that always come along (usually, mine are veterinary bills.)

How to save money if you’re living on a budget

Living on a budget doesn’t have to be complicated, nor you have to go through necessities.

Here are 7 ways you can save money:

1. Set up a budget with a budgeting planner

A budget is a plan on how you will spend the money you have. It’s a personalized instrument. Your earnings and expenses differ from mine, so your budget will look different from mine.

A budget isn’t a static tool, it changes, monthly. That’s why it’s so important to have one and work on it, anytime you have money coming in and going out of your bank account.

Making a budget gives you a clear picture of where your money goes and shows you where you can save money.

Having a budgeting planner might be the best piece of advice I can give you. I use one for about twenty years now, and I find it to be the perfect way to manage my finances.

My budgeting tool is nothing more than a notebook. You can do it in an excel spreadsheet or specific apps. But the notebook is my system of choice.

I divide a blank page into three columns: the first is “Expense”, the second is “Amount” and the third is “Date”.

When I first started with my budgeting notebook, I didn’t include the date, but I find it very useful. Visually it gives me the information if it was already paid or not and, in case of doubt, I go to the previous month and see what day usually the bill drops on my bank account.

In each monthly page, I include not only my usual expenses - like rent or petrol - but also extra ones, including any treat I give to myself.

By detailing where I spend my money, I have a realistic awareness of my finances. I know exactly how much I spend in each item of my list, and I’m able to make an average for the ones who aren’t fixed, like food shopping.

I also see how I managed my pocket money — if wisely or if I could do better. Usually, it’s the first.

My budgeting notebook was, undoubtedly, my best teacher, in what financial managing concerns.

2. Cut superficial costs

To save money when you’re on a budget means you have to make a few sacrifices. It doesn’t mean you have to struggle, just to cut where you can.

For me, I had a few things where I could save money: I gave up of Nespresso coffee and became an instant coffee drinker (this was a hard one, but it had to be done.) I gave up Netflix, and my dog went from raw food to dry one. Only on these three things, I saved about £50 a month.

I also cut on other superficial expenses. Those were not an immediate choice but came as a result of the pandemic. However, they would happen anyway: I stopped going to coffee shops (which are my favourite place to write), having meals out or going to the cinema.

If you look at your budget, I’m sure you’ll find items you can cut or lower the spending. If it’s something that makes you shrug (like Nespresso did with me), think about your goal; how much you want it.

3. Buy cleverly

We have to eat; ergo we need to spend money on food. We also need a clean house, meaning we need cleaning products.

There are inevitable expenses, the ones that you must spend money on. However, you can do it cleverly, doing it with your “saving money” hat on.

There are a few ways you can save money on your monthly house shopping: swap from commercial brands to the white ones, the retailer’s brand. I mostly shop at Tesco and Asda (including petrol for my car); their brands have excellent quality and they are much cheaper.

You can also save a bit of money by buying in bulk. For instance, buying a pack of 24 rolls of toilet paper is always cheaper than buying a pack of 4.

Another trick I use is to use the supermarket's “lower price” and the roll-back products — the ones that are temporary cheaper.

I also use the supermarket fidelity cards, which accumulate points that will reverse in vouchers.

4. Shop online

I’ve always been a fan of doing my house shopping online. I don’t like shopping of any kind.

You will have much more control if you make your shops online; you will not suffer from the “impulsive buying syndrome”.

If you’re relaxing at home, buying your groceries, you’re less likely to be attracted to the appealing marketing strategies the stores use. They exist online, of course, but they’re easier to resist.

Also, you will visualize how much you’re spending before paying, which will give you a chance to manage your trolley: to delete the items you don’t really need or replace them for cheaper ones.

5. Reduce your utility bills

You can cut down on your utility bills in two different ways: 1) reduce the consumption (buy using economic bulbs, unplug electronics, or cutting on long showers/baths) and, 2) by swapping providers.

There are several websites where you can compare the prices of providers, helping you to make a better deal on your utility bills.

When I moved to my new flat, I used it, and I got better deals than the previous tenant had. I also negotiated my car and my dog’s insurance. Again, I saved money.

6. Make your own gifts

Christmas is coming and, with it, spending money. This year, I’m not buying gifts for anyone, I’m offering things I’m doing myself.

For my reader friends, I’m going to offer them a short story written by me. To my son and his girlfriend, I’m crocheting them a warm, stylish scarf. My boyfriend will receive a personalized t-shirt with a private joke — I bought a cheap top on Primark, and I’m painting it myself.

Christmas is about reuniting, about family and friends, it’s about love and presence (even if virtual, as it might happen this year.)

Having a controlled budget teaches you lots of lessons, one being that money it’s important, but it’s not the most important thing: being and feeling, are.

7. Start a side hustle

Besides cutting expenses, you can also save money by adding gains to your budget: increase your income through a side hustle.

For me, it’s writing. For you, it can be teaching, or it can be what you already do, like with accounting or translating services.

Think about the skills you have and how you can monetize them.

Final Thoughts

Living on a budget can be tricky, but it doesn’t have to be dramatic.

It’s possible to do it and still have a good lifestyle. And, more than that, it’s possible to live on a budget and still saving money. You just have to learn to prioritize and wisely manage your finances.

If you create a realistic budget planning and stick to it, you’ll be able to save money, even if it’s a small amount. In the bigger picture, everything counts.

Finally, I’d like to give you what might seem to be a contradictory piece of advice: indulge in a frugal expense once in a while.

The principle is the same when you’re on a diet: allow yourself to eat something you really want once a week. It takes the pressure off and helps you to stay on track in the long term.

I’m not saying for you to go out for the weekend or have dinner in a five-star restaurant. No, nothing alike. What I’m suggesting is for you to treat yourself once in a while.

Saving money while you’re on a budget it’s possible. As long as you are methodical, focused, and organized, you can do it!

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