If you’re on a low income, the idea of saving money really isn’t as easy as a lot of people make out. Something I do to make it a bit easier is to automate my savings.
Many people wait for the perfect moment before they start saving, but instead of doing that, I’ve decided to take advantage of my bank’s ‘Save the Change’ feature.
This isn’t going to really help me to build my emergency fund or wipe out my debts. But it will help me to build tiny savings in the background without having to think about it.
What is ‘Save the Change’?
Save the Change is a feature from my Lloyds Bank current account that rounds up any purchases to the nearest pound, and automatically transfers the difference to a separate savings account.
So if I spend £2.30 on something, my bank will round this up to £3.00 and move the 70p difference into my savings automatically.
It’s easy to set up and completely free to use, and once you do set it up it’s completely passive. Think of it as an automatic money box.
There are other apps that do this as well, such as Plum and Moneybox, but I haven’t really used these yet. I reckon once my income improves, I will start using these to save even more money, but that’s in the future.
Why I Started Using It
I’m not someone who spends a lot day to day. If you’ve been reading this blog for a while, you’ll know that I use two different current accounts, my main account, and my bills account.
Most of my transactions are small card payments from my main account, while my regular bills come out of my bills account separately.
I’ve only activated Save the Change on my main account. That means it’s only rounding up when I’m spending on non-essential purchases, and my bills aren’t rounded up.
I’ve done this on purpose, I need to be mindful not to put away too much and end up short.
I’m only saving around £5-7 per month with this right now. Even though it’s not that much, I find it’s a good sign. Seeing as the amount I’m saving is based on my spending, saving small amounts tells me that I’m not wasting much money at all.
Because if I’m not spending much money in the first place, there won’t be much to round up. But the money I am saving is being quietly put away without me noticing it’s gone.
What This Money Is Actually For
This isn’t going towards my emergency fund or debt repayments, I’m already putting 10 percent of my income towards that. This is just something I’ll use for low-priority things, such as birthday presents, Christmas expenses, and little one-off purchases.
So basically, this will be my ‘low-priority fund’ and I’ll be building this up slowly in the background.
Previously, I would buy these luxuries regardless of whether I could afford them or not. I’d either use my main savings, or use my credit card. That’s the main reason why I got myself into so much debt in the first place.
Now, I’m slowly building myself a small buffer so if I have any of these low-priority expenses, I’ll be able to handle them without dipping into savings or going into more debt.
The Benefits I’ve Noticed So Far
Here’s why using Save the Change is working well for me:
- It doesn’t rely on me remembering to save, it completely runs in the background.
- I barely notice the round-ups coming out.
- It reflects my spending habits honestly. Small and infrequent round-ups tell me that I’m living within my means.
- It’s teaching me the habit of automating my money. This will be even more useful once my income increases and I find myself being able to treat myself a little bit more.
It also feels good to see this savings account growing gradually each month, even if it’s only a couple of pounds here or there.
It’s Not Life-Changing, But It’s Something
Even though I automate my savings using Save the Change, it isn’t for paying off my debt or building my emergency fund. It won’t replace proper budgeting or make me wealthy either.
This is about getting into the habit of letting my money work behind the scenes.
Right now, I’m still living frugally, managing a low income and rebuilding my finances one day at a time. This means I’m not spending enough to enable me to save a whole lot, but each time I do save some money, it’s a small win for me.
Final Thoughts
For anyone else on a tight income who is struggling to put away anything, I’d genuinely recommend to automate your savings, even if it’s just a few pence here or there. In my opinion, using Save the Change is a great way of doing that.
I’ll keep this feature running in the background and use this money for my luxuries without dipping into my savings or going into more debt.
I know I won’t be able to spend this money on holidays any time soon, but this method is about making slow and consistent progress, which is exactly what PoundWise Journey is about.
You don’t need to wait for the perfect moment to start saving money, you just need to start no matter how little the amount.