How To Save 8K in One Year On One Income

Need to boost your savings? This easy 3-step plan will help you do just that. Savings | Boost | Increase | Guide | How To | Tips | Save Money | Frugal Living
Easily give your savings a boost with this 3-step plan.

Do you struggle to have any kind of savings? Do you find yourself getting to the end of each month with nothing to spare and are living paycheck to paycheck? Would you like to change that?

In this post, I’m going to share with you my 3 step process for building up your savings even if you’re a single income family (like us!). I’m going to be asking you a LOT of questions to get you to take a good look at how you handle your finances. Are you ready? Let’s dive right in…

If you’re needing to go even deeper into this, I’m currently creating a course which will teach you exactly how to set and stick to your budget each month. Sound like something you’re interested in? You can add yourself to the VIP list no strings attached, so that you’re the first to hear about it when I launch later this year. You’re not committing to anything other than receiving some emails about my ‘Budget Like A Pro’ course.

Now back to today’s post…

 

Are you above or below average?

The average annual income for a family, after tax, in the UK is £26,300. That’s according to the Office of National Statistics at the end of the 2015/16 financial year. What do you think when you see that number? Surprised at how low it is? Or how high it is? A lot of households will earn significantly more than that, and others significantly less. BUT what is important isn’t simply how much you have coming in, but what you do with that money.

 

What do you think the average income is in the UK? Find out here. #frugalliving Click To Tweet

 

Where does your money go?

Do you know where your money goes each month? Are you someone who’s never had to worry much about money because you’ve always had enough? Or do you struggle to make ends meet? (I did warn you there would be a lot of questions!!)

Before having kids we had the luxury of a double disposable income. We were earning above the average income and used one salary to live off while saving most of the other towards a house deposit. I don’t think we really made the most of this at the time. We certainly weren’t frivolous but I’m sure we could’ve easily built up more savings if I’d known then what I know now.

Since having kids and slashing our income in half (literally overnight!) I suddenly had to get VERY good at watching where our money went each month. It was a learning curve, but one that was well worth the investment (pun very much intended there, sorry for my dreadful sense of humour but I couldn’t resist!) 😉

 

1. Set a savings goal

This is the most important step to take if you’re serious about building up your savings. Without a goal you don’t have anything to aim for and no incentive to reach it. Take a moment to think about this question…

What are you saving for?

You need to ask yourself this in order to set yourself a savings goal. Are you saving for something specific like a family holiday or a new car? Or do you want a buffer of savings to be able to dip into when an unexpected expense occurs like a boiler or car repair?

Whatever it is you’re saving for, set this goal first so that you’ve got something to aim for.

 

What are you saving for? Set a goal so you've got something to aim for. #frugalliving Click To Tweet

 

2. Set your budget

Now that you’ve got your savings goal set, it’s time to set your budget. One way to do this is to work backwards from your goal, breaking it down into manageable chunks.

For example, if your savings goal is £1000 for a family holiday and you want to pay for that holiday in 5 months time, you’ll need to be saving £200 per month for the next 5 months.

How to work out your budget

The best way to set your budget is to sit down and make a list of all your expenses. Write down 2 lists – 1 of your fixed expenses (rent/mortgage, council tax etc) and 1 of your flexible expenses (groceries, clothes, coffee/lunch out etc).

If you need some help with this, I’ve created some custom budgeting worksheets which you can get for FREE by clicking the button below. I’ve given you a place to write down all these expenses, plus a place to keep track of all your big annual expenses (car tax/house insurance etc).

Now look at your income minus your expenses. (There’s a place specifically for this in the worksheets to make this easier for you). If that number is round about where your savings need to be each month then you’re ready to move onto step 3. If not, then read on…

Make sure you are being realistic!

Continuing the example above, if you know that there’s no way you’ll be able to save £200 per month, then you either need to adjust your end goal or your timescale.

Having a holiday in 10 months time rather than 5 months means you’ll only need to save £100 per month. Alternatively, keeping your 5 month target but choosing a cheaper holiday that costs only £500 will also result in you only needing to save £100 per month.

Look at that income-minus-expenses number again. Are you getting closer now that you’ve made some adjustments?

Another way to adjust your budget to fit your savings goal is to take a look at where you can make savings each month. Are you really getting the best deals you can on your big expenses like car insurance? Pop over to this post to read more about how you can make mega savings on these big expenses.

 

3. Automate your savings

Ok, now that you’ve got your savings goal and your budget sorted, the hard work is done and it’s time to automate your savings and watch those numbers go up! This is the best (and easiest) part.

Is a separate savings account really necessary?

There may be one more step you need to take in order for this to work properly. Do you have a separate savings account? If not, then I strongly recommend you go and set one up right now! You may think “is this really necessary?” to which I am going to answer “YES!!” In my opinion, this is the best thing you could do if you are serious about saving money.

Most banks have some form of savings account or ISA you can set up. The interest rates aren’t particularly good but that’s not the reason I recommend you have a separate account. The reason I strongly advise you to do this is simply to take the money out of your account so it cannot be spent.

It’s that simple. If the money is in your account, even if you say to yourself “I shouldn’t touch that because it’s part of my savings”, the temptation is still there. It’s all too easy to pull out your debit card and keep spending without taking much time to look at how much money is left in your account. Even if you do look at your balance, you might forget that some of that total is supposed to be your savings. If you move the money out of your debit card account, it can’t be spent.

Bonus tip: I have my savings account and my debit account with the same bank. This makes it really easy for me to transfer money into my savings with my online banking.

 

Automate your savings and watch them grow. #frugalliving Click To Tweet

 

Save at the start of the month

Now that you’ve got your 2 separate accounts, you need to set up a direct payment from your debit account into your savings account at the start of each month. Don’t wait until the end of the month or, like I said above, chances are you’ll have spent your savings. Do this at the start of the month so that the temptation is taken away. You’ll be surprised how quickly you forget that you even had that money in your account. And your savings will start growing nicely each month.

It’s a very satisfying feeling watching those numbers go up each month, getting closer to your goal. And I think you’ll agree that this wasn’t a very hard process to go through in order to achieve your goal.

 

Using this exact process, we managed to save £8,000 last year as a single income family! 

 

Want to learn how to ‘Budget Like A Pro’?

I mentioned at the start about my course ‘Budget Like A Pro’ which will be launching later this year. In this course, I will go into much more depth about how to set your budget and, more importantly, how to stick to it each month. If that sounds like something you need then add yourself to the VIP list today to make sure you’re the first to know when it launches. You’ll also get a special discounted launch price too, yay! Pop your details below and watch out for an exciting email coming later this year!

Summary

I’m excited to see how your savings grow by following this simple 3 step process.

  1. Set yourself a savings goal so that you know what you’re aiming for.
  2. Work out your budget so that you can reach your savings goal. Make sure it’s realistic.
  3. Automate your savings and watch the numbers grow!

Leave me a comment below to let me know how you get on.

 

Budget like a pro with this simple 3 step process. #frugalliving Click To Tweet

 

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