How to Save Money When Broke

Many people believe that they cannot save because they do not have spare money. This can be particularly true if there is a large level of debt to address. What few people realise is that sacrificing that cappuccino on the way to work, or walking to the next bus stop rather than taking the closest one, could release enough to put a small amount away on a regular basis, ultimately leading to a dramatic difference in finances.

Perhaps the best way to start saving is to do it in a way that you barely notice. Here are five options to consider:

  1. Each evening empty out your purse, pocket or wallet and place all small coins into a jar or other container. Make it a rule that no family member can take anything out of the jar once it has gone in but at the end of each month take what is there to the bank or building society and pay it into a savings account. Banks are used to people coming in with small coins in this way and will give you banking bags free of charge so that you can pay it into your account in €1 or €5 amounts. Many banks restrict the number of bags you can pay in at one time to about 5 or 6 bags (so as not to hold up other customers as they check and count them) but if you do this monthly there is unlikely to be any more to pay in at once. If you saved €5 per month by doing this, you would have €60 in your savings account at the end of the year.
  2. If you have to use a credit card, switch to one that pays cash-back. That means that every time you use your card to buy goods or services, the card company will store up a small percentage of what you have spent and once a year it is paid back to you directly or by using it to pay off your credit card. You are therefore saving up without actually having to have money to do so and are saving by spending. However, do check the rates. You might still be better off using a 0% credit card with no cash-back, as opposed to a card that offers cash-back and charges you large amounts of interest. Some cards offer a 0% interest for the first 9 months of having the card and cash-back in addition. If you spend €500 per month on your credit card and have a 0.5% cash-back, you would have €30 due back to you at the end of the year.
  3. If you have a budget for food or personal spending each week, reduce it by a small amount. A food bill of, say, €100 per week could be restricted to €95 per week with minimal effect. Knowing you have a restricted budget will automatically ensure that you seek out the cheaper brands or the special offers and often the options that work out cheaper are actually the more healthy ones (for example, it is more economical to buy fresh food and to cook it at home than to buy take-away or processed ready meals). Visit your bank before going to the supermarket each week as that will save the temptation of keeping the saved money within reach. A €5 saving each week will give you €260 saved up by the end of the year.
  4. Another alternative with food is to decide to shop one day later than usual (for example, if you usually shop once a week, make it once every 8 days). Most people have tins, dried food and frozen food in their cupboards that sit there for a long time. You have been keeping them for a rainy day and times of financial hardship are just such times. If you usually shop once a week and you cut that down to once every 8 days you will save 6 shops a year. If your budget was €100 per trip for 52 shops a year, this would be reduced to €100 per trip for 46 shops per year meaning that you could add €600 to your savings account.
  5. Many shops now offer loyalty points of one sort or another. There are two options with these: either, keep them to one side and don't use them until just before their end date, meaning that you can always fall back on them in times of financial crisis; or, secondly, when you spend them put the equivalent amount of money into your savings account. You would have had to spend that anyway if you did not have the voucher and this is a way to keep the benefit of the voucher without an end date and to allow it to accrue interest. To save an extra €52 per year, all you would need is €1 in vouchers for the supermarket or pharmacy each week that would add up to €52 per year in your savings account.

Of course, you are not restricted to just one of the above and if you follow all the examples above you would have €1002 saved up by the end of the first year, excluding interest which could add an extra €20 or €30 to that total. For many people that may be enough to pay one or two months mortgage payments a year and you would not complain if your mortgage company offered you two payment-free months would you?

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