According to CNN Money, 76% of Americans live paycheck to paycheck.
And according to The Federal Reserve, nearly half of Americans can’t cover a $400 emergency expense without borrowing the money or selling something.
This is exactly why people like Dave Ramsay strongly advise you build a $1000 emergency fund, so you can cover these unexpected expenses when they happen.
But it’s IMPOSSIBLE to save money when you’re living paycheck to paycheck, right?
It turns out, with a bit of discipline, I discovered it’s totally possible to save a $1000 (c. £820) reserve fund in just 30 days, even when you’re used to living paycheck to paycheck.
The beauty of a reserve fund is that you’ll have the resources to pay for any emergency expenses without either going into further debt or drawing on your actual savings.
Plus, if you do have debt, it’s far easier to start tackling the actual debt once you have a reserve fund, otherwise unexpected expenses can just feel like even more debt.
Want to get started building a reserve fund or savings pot?
Now, to make this work, you have to be disciplined (yes you can do it) and you need to believe you can do it (yes, again, you can do it).
If there’s a little voice in your head whispering, you can’t do this – tell it to be quiet!
I can’t guarantee you’ll save $1000, but it’s almost impossible not to make savings if you follow these steps.
Ok, let’s do it.
STEP #1 – SAVE MONEY BY STICKING TO THE ESSENTIALS
Let’s kick off by grabbing a piece of paper and a pen and listing ALL your direct debits and regular payments for the month.
Everything from your mortgage or rent, right through to TV subscription packages, insurance costs or debt repayments. Leave shopping, clothing allowance, travel and entertainment costs for now, we’ll deal with these separately in step 3.
Next, note the amount you pay every month, for each item, next to it. For example, rent – $800.
Next, go through the list and mark every item that is not essential to your life right now. There will almost certainly be some. Be disciplined with yourself here. You’ll be surprised at what you can save.
Remember, you can always re-instate these things at a later date if you want to, when your finances are more fluid.
What I stopped and how much I saved:
- Weekly local veg box – saving of £42 ($51 ) a month
- Charity donations – saving of £20 ($24) a month
- Online subscription costs to things I could really live without: £25 ($30)
Total saving for month: £87 ($106)
YOUR ACTION POINTS STEP 1
- List all your regular debit debits/outgoings for the month
- Mark any items you could survive without and stop them for now
- Make a note of your saving.
STEP #2 – SAVE MONEY BY GETTING BETTER DEALS
Next, have a look at your monthly outgoings that remain from step 1 and see if there is anywhere you could save money by looking for a better deal.
Things like car or breakdown insurance renewal costs, for example, are usually calculated by a computer and it’s very unlikely you’ve been offered the best price.
It’s also worth doing your research to see if there’s a company you can switch to who will offer you a better deal for gas and electricity, TV, Internet and mobile phone costs. All it takes is a quick phone call.
Comparison sites can be super helpful here and they’ll sometimes arrange a switch for you.
Otherwise, just be a bit brazen! Call a company direct and ask if there is a better deal available. They’ll often say yes, rather than lose your custom.
How much I saved:
- Breakdown insurance renewal £72 – negotiated it down to £35! – saving of £37 ($45)
- TV & Internet package – negotiated a £9 ($11)a month saving on my bundle (if I’d switched suppliers I could save another £20 a month as a new customer and get £75 cashback, which I am planning for next month)
- Mobile phone – switched from an iPhone to an Android (*sigh*) – saving of £17.50 ($21)
- Monthly online subscription – switched from monthly payments to a one off annual payment – BIG SAVING of £125.88 ($153.26)
Total saving for month step 2: £189.38 ($230.26)
Running total: £276.88 ($336.26)
YOUR ACTION POINT STEP 2
Use comparison sites or just call company retention departments direct, to see if there are better deals out there for utility, insurance or TV & Internet costs etc.
STEP #3 – SAVE MONEY BY SETTING A BUDGET
Most people live paycheck to paycheck and fail to set a proper budget for the month. This invariably results in overspending or money running out long before the month has ended.
Don’t do this!
Instead, grab a notepad and write down your total monthly paycheck or income (after taxes).
Next, write down your total remaining (or reduced) monthly outgoings from step 1 and 2. Then subtract this figure from your monthly paycheck/income figure.
The figure you get is what you have left to spend for the month on things like shopping, clothing, travel and entertainment costs.
Example: Paycheck of £2000 minus total monthly outgoings of £1200 = £800 available monthly spending budget.
Next, set a realistic budget for shopping, clothing and entertainment costs for the month that are within your available monthly spending budget figure, whilst also identifying any savings that could be made in these areas.
Example: Available monthly spending budget: £800
From this figure, calculate your shopping, clothing and entertainment costs – for example:
- Shopping budget – £400
- Travel costs (petrol, parking, public transport to work etc) – £200
- Entertainment budget – £125
- Clothing budget – £75
Now look for any savings you could make in these areas.
Some possible ideas to try might include:
- Cutting out that takeaway skinny frapachino latte with extra syrup for a month!
- Reducing the weekly pizza treat to once a month
- Cycling or walking to work twice a week instead of getting the bus
- Setting a weekly meal plan so you buy what you need, rather than ad hoc purchases, which often work out more expensive
- Bulk buying in larger quantities, or online, where it’s often cheaper
- Reducing soda, juice, and alcohol consumption as these can really jack up grocery bills
- Cooking bulk batches of food and freezing them – cheaper than cooking separate meals.
What I changed and how much I saved:
- Stopped buying takeaway latte after school run, Mon to Fri, for a month – saving of £45 ($55)
- Reduced our eating out dinner treat to once a month – saving of £60 ($73)
- Reigned in mine and My Little Lady’s cafe culture spending! – saving of £20 ($24)
- Started meal planning and sticking rigorously to a set weekly food budget – saving of approx £80 ($97) (I was completely overspending here without realising it)
Total saving for month step 3: £205 ($249)
Running total: £481.88 ($585.26)
YOUR ACTION POINTS STEP 3
- Create a workable monthly budget
- Identify any ways you can make any immediate further savings with your shopping, entertainment, travel and clothing allowances.
Note: I’m a bit old school and use pen and paper and a simple spreadsheet to work out my budget, but many people swear by budgeting apps, such as Mint.
STEP #4 – SIGN UP TO SOME CASHBACK SITES
Do you shop online?
Then I recommend signing up to some cashback sites.
Example: I can get 8% cashback on a Lego Land trip I’d promised my Little Lady for her 6th birthday, just for booking it via Topcashback. And if I switch my TV & Internet package, (which I’m thinking of doing) I would receive a massive £65 cashback from the provider I’d choose to move to.
Reward sites such as Swagbacks or Qmee or are also really popular with many people. I’m personally not a massive convert, as I prefer to focus my time elsewhere, so the decision is totally up to you, but many people seem to swear by them for earning a little bit extra.
Total saving for a month from cashback and reward sites: £40 (easy money for not doing very much!)
Total saving for month step 4 – £40 ($48.65)
Running total: £521.88 ($ 633.91)
YOUR ACTION POINT NUMBER 4
Sign up to some cashback or reward sites and start saving with your online shopping. Here are some to try:
Popular cashback sites
- US – Sign up to Ebates and get a $10 welcome bonus
- UK – Sign up to Topcashback to start saving on your shopping
Popular reward sites
- Sign up to Swagbucks
- Sign up to Inbox Dollars and get a $5 welcome bonus
- Sign up to Inbox P0unds and get a £1 bonus for joining (it all adds up I guess!)
STEP #5 – SAVE MONEY BY SELLING YOUR PRELOVED STUFF
Most of us have stuff lying around we no longer need or use. If it’s in good conditions, it’s highly likely someone will pay you money for it!
Selling it online is easy to do, plus it helps declutter your home and of course the best bit is that it can bring in some extra cash pretty fast.
Here are some ideas:
- Sell your old CDs, movies or games on Amazon Marketplace, Ebay or trade in sites such as Music Magpie (UK) or DeCluttr (US). Trade in sites won’t pay you much but it all adds up.
- Sell your unwanted clothes or baby wear on Ebay. Well presented bundles of baby clothes, designer wear, or jeans with popular labels all tend to sell well.
- Sell unwanted furniture or working electrical items on Gumtree or Craigslist.
What I did and how much I saved:
- Sold almost new toddler clothes to a local store selling preloved stuff – £15 ($18)
- Sold old books and CDS to a second hand music store – £20 ($24)
- Sold some rarer DVDS and popular box sets online – £45 ($54.73)
- Recycled an old mobile phone online and got paid cash for it – £12 ($14.60)
- Sold a portable radiator and and old buggy on Gumtree – £30 ($36.49)
Total saving for month step 5 – £122 ($148)
Running total: £643.88 ($782)
YOUR ACTION POINTS STEP 5
- Identify any preloved items around your house that are in good condition that you no longer need or use.
- Sell them online on places such as Amazon, Ebay, Craigslist or Gumtree.
STEP #6 – SAVE MONEY BY BRINGING IN MORE MONEY
It’s actually a lot easier than you might think earning a bit of extra cash online each month.
Making a side income online has been a life saver for me in topping up my income, whilst I build and grow my blog, so whether you’re a stay at home mum, student, or already hold down a full time job, there’s almost certainly something that will suit you.
I’ve covered some above, already, but for more actionable ideas, check out my post on 57 Ways To Make Extra Money Online (That Don’t Involve Survey Sites).
How I brought in extra money online:
- Signed up to User Testing (review websites and get paid around $10 per test) – £57 ($70)
- Did some matched betting – (UK only) – I only dabble in this now, but some people make up to £2k a MONTH doing it and I regularly made over £500 a month last year) – £96 ($116.76)
Total Saving for month step 6 – £153 ($186.76)
Running total: £796.80 ($968.76)
YOUR ACTION POINT STEP 6
Find a money making method online that suits your lifestyle and earn a bit extra for the month.
STEP #7 – SAVE MONEY BY BEING A BIT CREATIVE!
Lots of small savings can add up, so try being a bit creative and even have a bit of fun! Here are some ideas I tried that worked well:
What I did and how much I saved:
- Raided the money box where all my loose change goes – saving of £23 ($28)
- Put all UK 20p pieces I received as loose change in a jar for a month – saving of £6 ($7)
- Searched online deal sites for special offers on things like eating out – saving of £14 ($17)
- Made my own homemade deodorant, toothpaste and cleaning products (works out a lot cheaper than the expensive, natural and organic products I was prone to buying!) – saving of £11 ($13)
Other ideas to try:
- Look for freebies – for example, many hair salons advertise free haircuts with trainees
- Sign up for store reward cards and get special offers and discounts and money off vouchers
- Take advantage of online coupon sites and codes
- Grow your own food – this is more of a long term saving, but using a corner of your garden, or getting an allotment, is super cheap and can save you a shed load (no pun intended).
- Enter free competitions online or sign up to sweepstake sites.
Total saving for month step 6 – £54 ($65)
Running total: £850.80 ($1034)
YOUR ACTION POINT STEP 7
Come up with a few creative ideas of any extra small ways you could save some extra cash, such as saving your spare change in a jam jar or making your own deodorant. A few small ideas can add up.
STEP #8 – USE CASH AND AVOID TRIPS TO THE ATM!
So, that’s it – ‘ding – ding’ – target achieved!
You’ll find it’s a helluva feeling when you start to see your money build up.
These final two steps, however, can help you stay even more disciplined with your budget and money saving. Don’t skip them.
OK, so step 8 – basically I used to think I was being frugal with my habitual ‘draw £20 out the ATM’ and make it last school of budgeting. Does this sound daft to you? Yes? Well, I wish I’d listened to you! It doesn’t work.
Because the £20 kept running out and I’d draw out another. And then another. And then…you get the idea.
Before I knew it, I’d blown most of it in sneaky trips to the cafe and expensive produce from the health food shop or, worse, chucked things on my debit card because I didn’t have enough cash!
Guess what – I always overspent.
Which me brings me back nicely to Step 3 – Your Budget!
I now withdraw a weekly allowance from the ATM (ATMs are then banned for the week) in line with my budget and stick to it.
I could not believe the change it made.
I not only felt like I somehow had more money, it also made me super mindful about everything I bought. And best of all, I remained in budget.
So my advice is to use cash wherever you can.
If you’re not comfortable carrying lots of cash about though (or you are prone to losing your purse!) putting your budgeted cash for the week (or even month) in separate envelopes works really well for some people.
For example, mark up an envelope with Shopping Expenses for April, Entertainment Budget for April etc and pop your allowed cash for each inside and stick to it.
Come on, it takes 5 minutes.
Yes, it requires a certain level of discipline, but it can also reap BIG rewards. I actually came in under budget in my first week of using cash and I don’t feel I’ve missed out on anything at all.
In fact, I feel more in control of my money than I have for years (if not ever).
YOUR ACTION POINT STEP 8
Start using cash and sticking to your allotted budget for the week or month.
STEP #9 – SET UP A DEDICATED ONLINE BANK ACCOUNT
This is a really important step.
It usually only takes a few minutes to apply for a second account online and what this means is that you’ll have a dedicated ‘home’ for your new funds.
If you keep your funds in your house or apartment, there’ll be an enormous temptation to dip in and ‘borrow’ some. Similarly, if you put them in your main current account, they’ll most likely get eaten up and you’ll wonder where an earth they went!
YOUR ACTION POINT STEP 9
Open a dedicated online bank account and deposit any savings you make.
So there you have it – how to save $1000 (or around £820) in a month.
You may come in under (or over!) this amount – it doesn’t matter – the key here is to set a target, then stay focussed and disciplined until you achieve it.
If $1000 sounds like too big a target to start with in one month (I totally get that), simply set your own goals. You are far more likely to achieve a goal you see as reachable, than you are a goal which seems just a little bit too much right now.
There’s no set or right way to saving money, but setting goals and having a disciplined mindset towards your finances is an invaluable thing to do.
Plus of course, if you didn’t already have one, your reserve fund will now have you covered for many of life’s unexpected money emergencies.
Oh and you’ll feel amazing when you reach the target you set for yourself!
Now go forth and save…
*Conversions from £ to $ are approximate and may vary depending on exchange rate.
Have you saved money lately? What strategies worked for you?