How to save money in 7 simple steps

It's no secret that the cost-of-living crisis is a major concern for families all over the UK. Statistics show that the price of goods and services rose by a whopping 9.6% in 2022, the fastest rate in 4 decades.¹

Saving up for the unexpected is more important than ever, but how do you do that when you're barely keeping up with inflation? In this article, we'll give you a 7-step action plan you can follow to save money, even on a low income. You'll learn everything from budgeting strategies to clever ways of boosting your earnings while lowering your expenses.

We'll also show you how to put your money to work for you with Revolut Instant Access Savings. Not only will you earn interest on your balance, but you'll also get powerful budgeting tools that'll keep you on track. Who knows? You may even be able to save money faster than you expect.

1. Understand your current finances

Let's start with the prep work. Before you begin saving, it's important to have a clear picture of how much money is coming in and how much is going out. Here are some practical steps you can take to understand how much you can afford to save on a regular basis.

• Add up all your sources of income.
  This may include your salary, freelance earnings, investment returns, rental income, and any other money you receive regularly. Make a note of the amount and frequency of each income source.
• Track your expenses.
  You may have an idea of where your money's going — but do you really know? Challenge yourself to keep a detailed record of everything you spend money on over a month. This includes both fixed expenses (like rent, utilities, and loan payments) and variable expenses (like groceries, entertainment, and miscellaneous expenses). Your observations may surprise you.
• Determine how much of a buffer you have for savings.
  At this point, you just need a rough idea of how much you can afford to save each month. Subtract your monthly expenses from your income. From that amount, how much can you comfortably set aside? Make sure to leave a little wiggle room for unexpected or variable expenses. If you're nervous about committing to a large savings goal, start small and build your way up.
• Categorise your expenses.
  This is where Revolut's budgeting tools come in handy. You can use the app to create categories for each of your main expenses and track your spending with easy-to-use analytics tools that'll give you powerful insights. Once you have a clearer savings plan in place, you can even set spending limits for each one to keep your expenses in check.

2. Map out your financial goals

With a clear idea of your income and expenses, you can start honing in on specific savings goals. It'll be much easier to allocate your budget, stick to your plan, and stay motivated if you're saving for a purpose.

• List everything you want to save up for.
  And that means everything. You know that house you've been wanting to save up for but never considered possible? Put it on the list. Holiday in Cancún calling your name? Write it down. Big or small, it doesn't matter — let your imagination fly free. It might take a while to make it all happen, but setting an intention early on will plant the seed.
• Keep your long-term goals in sight.
  This may include saving up for retirement or building an emergency fund for unexpected expenses. When you're in the thick of your daily frenzy, it can be easy to overlook these. Keep these on your radar to set aside some money for ‌things that seem far off in the future.
• Prioritise your projects.
  What matters most to you? What's most urgent? If you've already set a wedding date and it's crunch time, that might be your top priority. You may want to focus on that first and put other savings projects on hold. Don't spread yourself thin too quickly, especially if you're just now getting into the habit of saving.
• Set a monthly savings target and timeline for each goal.
  Look at the total amount of money you can set aside each month. How do you want to allocate it? If you really need a new car to get around, for example, you might want to go all in on your car fund for a few months and postpone your home deposit savings for a while. Decide how much you plan to save for each goal and how long it'll take you to get there. Once you reach one goal, it'll be time to tackle another one. Reassess and reallocate your savings to keep yourself going.
• Tailor your savings strategy to the specific goal you're working towards.
  Your plan is going to look a little different, depending on what you're saving for. If you're saving for a house deposit, it might involve looking into government schemes designed to make homeownership more affordable. Saving for a wedding, a car, or a holiday may involve looking for tricks to find great deals for your purchase. Be flexible and explore all avenues, from maximising your income sources to reducing expenses.

📚 Already have a specific goal in mind? Check out these guides and explore some little-known tips that'll help you get the most out of your money.

How to save money for a wedding
How to save money for a holiday
How to save money for a car
How to save money for a house deposit
How to save money for Christmas
How to build an emergency fund

3. Open a savings account (or two)

Of course, you can keep your savings in your current account, but let's be honest — how likely are you to keep those savings intact when they're mixed in with your everyday spending money? It'll be much easier to avoid dipping into those funds when they're stored away in a separate account.

Plus, some savings accounts pay interest, so you'll be able to grow your money consistently over time. It won't make you rich overnight, but the longer your money's in your account, the more interest you'll earn.

There are lots of savings accounts to choose from: individual savings accounts (ISAs), fixed-term deposit accounts, instant access savings accounts, high-yield savings accounts, and so on. The best one for you depends on your personal needs and preferences, so do your research to find a good fit. Be sure to compare things like interest rates, fees, accessibility, and security to choose one that works for you.

And you don't have to put all your eggs in one basket. You might want to choose a different account type for each of your savings goals, depending on your timeline, your overall target, and the amount of flexibility you need.

Saving for retirement and building an emergency fund, for example, are two very different goals. You may need your emergency fund at any moment, so you might want to go with an instant access savings account for that and choose a different account type for your retirement money.

Revolut Instant Access Savings is one option to look into, for any goal you may have in mind. You'll earn up to 5% AER² variable on your GBP balance, with interest paid daily and instant access to your funds. You're free to add money at your own pace and make withdrawals whenever you need to — without any fees, penalties, or minimum balances to watch out for (T&Cs apply).

You can manage your savings safely from your app, with biometric technology designed to ensure only you have access to your money. For extra security, you can turn on the Wealth Protection feature and require selfie verification before every withdrawal.

The money you deposit in your Instant Access Savings is placed with a partner bank and is protected by the Financial Services Compensation Scheme (FSCS). The FSCS provides protection on eligible deposits up to £85,000 per person, per bank.³

With Revolut, you'll also get access to in-app budgeting tools that'll help you track your progress and meet your goals. You can create expense categories, set limits for each one, and get insights into your spending trends without spreadsheets or number-crunching. Everything you need to set a budget and stick to it is in one app.

² The Annual Equivalent Rate (AER) shows the interest you can earn over 1 year. AER is compounded, so you’ll earn interest on interest already earned. Rates depend on your plan type, from up to 4% on our Standard plan to up to 5% on our Ultra plan. Paid plan subscription fees and T&Cs apply. Interest offered is subject to change and any interest earned is liable to the applicable taxes. T&Cs apply.

📚 New to savings accounts? Find out what AER means and how you can use it to calculate your interest earnings.

4. Automate your savings

So, you've mapped out your goals, outlined your savings plan, and opened a dedicated savings account for each of your projects. Now it's time to take action and follow through.

This is where the best-laid plans often fall apart. If you've ever committed to saving and fallen off the bandwagon, you probably didn't have a solid strategy to keep you going strong. The good news is that there are some clever techniques you can use to stay on track.

• Set up automatic transfers to your savings.
  Set it and forget it. It's a great way to stay consistent and prioritise your savings as soon as your pay cheque lands, without the temptation to use that money for something else. With Revolut Instant Access Savings, you can schedule recurring transfers right in-app and time them to perfection. Set them up daily, weekly, or monthly, and change the amount whenever you readjust your plan.
• Take advantage of features like spare change round ups.
  If you're using Revolut, turn this feature on in-app to save a bit more. Whenever you make card payments, your purchases will be rounded up, and the difference will be sent to your savings account. Those pennies add up, and so does interest.
• Start small and work your way up.
  Trying to save too much too soon can make you lose steam fast, but slow and steady wins the race. Instead of going all in straight away, start by setting aside a small part of your monthly pay cheque and see how it goes. Then challenge yourself to increase that amount in a month or two. You might be surprised at how effortless it feels.

5. Find ways to boost your income

Step back and look at your income sources. Can you branch out and explore other avenues to maximise the amount of money you're bringing in? There are opportunities around every corner, if you get a little creative. Check out some tips that'll help you find your next side hustle.

• Look for freelance gigs.
  Got skills in areas like photography, graphic design, or content writing? Check out websites like Upwork or Fiverr. These connect freelancers with clients who need their services. You can also post ads on local community boards or in social media groups.
• Become a consultant.
  If you've got specialised knowledge in fields like finance, programming, or marketing, this one's for you. Consulting is a great way to leverage your expertise. It gives you the freedom to set your own rates, build your network, and take on projects that fit around your other commitments. 
• Find a part-time job.
  Retail and restaurant jobs, for example, are usually flexible options that you can juggle alongside your main job. They also tend to be seasonal, so consider riding the holiday waves to make a little extra money.
• Sell things you don't need any more.
  You know that desk you've got stored away somewhere? Sell it. Someone will be glad you did, and you'll make some extra cash. Websites and apps like eBay, Vinted, and Facebook Marketplace make it easy to sell everything from clothes to furniture. You can also go old-school and have a car boot sale.
• Rent out space.
  If you've got a spare room in your home, consider putting it up for rent. Websites like Airbnb can help you find short-term renters, which can be especially helpful during peak travel seasons. You can also post an ad at your local university to find students who are looking for housing.

6. Explore helpful money-saving hacks

Saving is a two-pronged approach — you want your income going up and your expenses going down. The more you can get those two moving in the right direction, the more you'll be able to set aside for your goals.

There are tonnes of ways to reduce your spending, without feeling like you're making a huge sacrifice. You'd be surprised how some simple swaps can make a significant difference. Check out these clever money-saving tricks.

• Find resourceful ways to save money on groceries.
  It's no secret that inflation has made the cost of food skyrocket — and you have to eat. Luckily, there are ways to reduce your spending here. Look for sales and use coupons to snag good deals. You can also buy the things you use frequently in bulk, or switch to store brands to save a bit more.
• Make home-cooked meals.
  The cost of eating out can add up quickly. Try meal-prepping and packing your lunch for work more often to stretch your budget a little further. You don't have to give up restaurant meals entirely — just save them for an occasional treat.
• Look for ways to save money on your electric bill.
  Adjust your thermostat before you leave for the day. Switch to energy-efficient lightbulbs. Unplug any appliances or electronics you're not using. Even the smallest changes can help you save on energy costs. Also, compare offers from different electric companies. You might be able to find special introductory deals or discounts.
• Save money on car insurance by shopping around.
  Before it's time to renew your policy, get several quotes from different providers. You might find a more cost-effective option. Just make sure you're not skimping on coverage.
• Switch to a cheaper mobile plan or internet service.
  And this doesn't always mean lowering your internet speed or compromising on quality. Many providers offer introductory deals to new customers, so you can lower your bill just by changing to a different company.
• Explore ways to save money on your water bill.
  Check for leaks and fix dripping taps to cut down on unnecessary waste, and replace old shower heads with more efficient ones. Also, consider switching to washing machines and dishwashers with low water consumption.
• Go thrift-shopping.
  Buying second-hand clothes, furniture, and other items can save you a lot of money. Plus, you might find some one-of-a-kind items that you can no longer find at retail shops.

7. Celebrate your progress

Reaching a milestone is a cause for celebration — and a great opportunity to keep yourself motivated. A sense of accomplishment will help you maintain momentum as you work towards your goals. Here are some ways to give yourself some well-deserved kudos along the way.

• Set mini-goals.
  Break down your larger financial goals into smaller milestones. These can be as small as you need them to be. Give yourself a pat on the back every time you're £100 or £500 closer to your target.
• Create a visual representation of your progress.
  This could be as simple as posting a chart or graph on your fridge and updating it as you move closer to your goal. Seeing your savings grow can be incredibly motivating.
• Reward yourself.
  Treat yourself to something small but meaningful when you reach a milestone. This could be a nice dinner or those shoes you've been eyeing. Just make sure it doesn't derail your savings plan.
• Reflect on your achievements.
  Take a moment to look back at how far you've come. If you've made it this far, there's no telling where you'll be in a few months or years.
• Share your success with family or friends.
  Their support and encouragement can provide an extra boost of motivation.

Start saving with Revolut

Ready to take a step towards your savings goals? Put your money to work for you with Revolut Instant Access Savings.

You can grow your savings on auto, make one-off transfers, and even save while you spend with spare change round ups on your purchases — all while racking up interest daily. You'll also get in-app analytics tools that'll help you track your progress and meet your goal.

It's a great way to watch your balance grow, every single day.

¹ According to the Office for National Statistics
² The Annual Equivalent Rate (AER) shows the interest you can earn over 1 year. AER is compounded, so you’ll earn interest on interest already earned. Rates depend on your plan type, from up to 4% on our Standard plan to up to 5% on our Ultra plan. Paid plan subscription fees and T&Cs apply. Interest offered is subject to change and any interest earned is liable to the applicable taxes. T&Cs apply.
³ Check out the Financial Services Compensation Scheme (FSCS) website for more information.