Many people focus on earning money rather than the benefits of saving. But reviewing what you’re spending and cutting back is the simplest way to find some extra cash in your budget. In 2019, a third of Brits spent up to £100 more than their monthly income. So how can you avoid overspending each month?

In England the covid pandemic has dealt a severe blow to the economy which is expected to shrink by more than 12 per cent this year. This is likely to affect everyone not just those in work.  It has been widely predicted that the chancellor will remove the tripple lock on pensions which ensures that pensions rise by 2.5 per cent a year or by the rate of inflation or the average wage increase. We have already lost our free television licence. So now is the time to focus on the savings part of the equation. Here are five simple steps to start to save money.

Switch your expensive vices for cheaper alternatives

You might be an avid smoker or enjoy your fine wines every evening. But cheaper alternatives can still provide the same sense of relaxation as their more expensive counterparts. If you’re a smoker, why not try vaping instead? Online Studies suggest that vaping is healthier than smoking too.

Review your entertainment budget

How much money do you spend eating out or going to the cinema each month? You may (or may not) be surprised by how much your bank balance goes down every weekend. Try to replace some of those takeaways or cinema trips with home-cooked meals, or a movie night. You can still make it a treat, but slash the budget and convert it to savings at the end of the month. The same goes for Netflix, Amazon Prime, or Disney+ accounts – try and cut any additional subscriptions out as much as possible.

Log what you are spending

Keeping a spending tracker for a month is an excellent way to monitor what your outgoings are. Use an app like Cleo to track your budget on your phone, or jot it down on the go. At the end of the month, review what your outgoings are, see where you’ve spent money you don’t need, and cut back next month. For the first month, if you can, try to mimic your everyday spending habits to give you an accurate picture of where you can save money.

Set realistic goals

Be realistic with how much you can save when you first start. You aren’t going to go from zero to a world cruise in three months. After you’ve made some cutbacks, set a realistic budget (even £50 a month will help out in an emergency). Turn it into a long term goal (I will save X amount in Y months), to keep the motivation going over more extended periods.

Treat extra income as savings

If you are working on starting your own small business, but have a full-time job or fixed income already, try not to treat this as part of your typical budget. When your supplementary earnings come in, treat them instead as part of your savings. You’ll be stricter with what you spend as the money won’t be viewed as an additional part of your budget, while your savings will go up quicker.

If you set a budget and source some cheaper alternatives to hobbies or additional expenses, you’ll be surprised at how quickly you can save money.

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