Should I save money when I’m broke?
Having a savings account seems to be the sign for nailing life where money’s concerned. But life is expensive, so just how on earth are you meant to put money away?
I have no money spare, so why should I save?
If you’re right up against it at the end of each month, the idea of saving might seem almost impossible.
But if you’re one of those people, it’s even more important you save. Why?
- Because you may have an unexpected cost, like your car breaking down, or your computer exploding right before a coursework deadline.
- Because you might suddenly stop getting money, for example if you lose your job, or a bank error prevents you from getting paid. What would you live off? Ideally you need enough to live for at least six weeks.
- Because something might come up that you really really want to do, like go to Glastonbury, or go on holiday with your mates. With savings, you can go without plunging yourself into expensive debt.
Having a float of cash is essentially just very wise. But more than that, it’s peace of mind. With a bit of savings, the thought of losing your job won’t fill you with such terror.
Plus, saving means you can do fun stuff like buy shiny things, or go to exciting places. It doesn’t have to be all Mister Scrooge counting beans in his dressing gown.
But HOW am I meant to save?
It’s simple. Save what you can, and it will add up over time. Here are some easy ways to save without noticing:
- Use a round-it-up app, banks are increasingly offering services where anything you spend on your card gets rounded up to the nearest pound, with the excess being put into a savings account automatically. Watch the money build without you even noticing.
- Set up a direct-debit to transfer money straight into your savings account and then you won’t miss the money because it was technically never there. Even if it’s only a tenner a month, it all counts.
- Start paying for stuff with cash, work out a budget and take out only your budgeted amount of cash for that week/day. Try to only spend what you need and put the rest in a good old fashioned piggy bank. It will be bursting before you know it.
Ok, but what’s more important, saving or paying off debts?
The really unhelpful answer to this is: both.
Ideally you need to pay off any high-interest debts ASAP as you’ll lose more money paying the interest than you would make through savings. Always prioritise paying off debts where you could lose your home.
HOWEVER it’s also really useful to have that float in the bank we were telling you about so that, if things fall apart, you still have some money left to eat.
For more support on sorting out debt, read this article about the best places for debt support.