How to save an extra £500 every month
The saying goes a pound saved is a pound earned but the reality is that a pound saved is much more than a pound earned. When we earn a living in the UK, we owe the government a significant amount of tax. Earning £500 as a basic tax payer leaves you around £330 after tax and national insurance whilst as a higher tax payer you’re left with even less.
On the other hand, if you save £500, it’s all TAX FREE and yours to keep. That’s why saving is much better than earning.
When I lived in Wakefield during my two core medical training years I really struggled to save any money. Earning around £2,500 after tax, rent was £800/month alone. After council tax, bills and food I was left with just three or four hundred quid before gym membership, clothes and expensive exam fees (MRCP) and memberships (GMC and BMA etc) gobbled up the rest. I didn’t even have a car at the time.
That has inspired this post so here’s are three ways you can save £500 or more every month.
1. Get a flat mate
The first and most efficient way is to reduce your accommodation costs as this is most likely your largest bill. Nowadays I only pay a little over £300 for rent inclusive of bills and council tax. The extra I save every month goes towards anything I like and most recently I’ve been investing in index funds.
Admittedly if you have a family with small children this is probably unrealistic but nothing is preventing you from letting one of your empty rooms out.
Let’s face it – even though most of us enjoy our jobs, if there wasn’t a salary at the end of the month, we wouldn’t be able to survive. If you’re able to cut your accommodation expenses by £500 then that’s a £6,000 pay jump every year. You can put this towards ISA investments, a higher degree or even a few holidays.
It also means you don’t have to work those two extra 13-hour locum shifts EVERY MONTH if you’re struggling with debt.
There are two main ways you can get yourself a flat mate. If you’re fortunate enough to own your own property with more than 1 bedroom then you can let a room out and earn £7,500 every year TAX FREE on top of your personal tax allowance. I know letting a room out in your own home may not be everyone’s cup of tea but lots of people do it and they do it successfully. You can also consider letting a room out on a day to day basis if you don’t wish to commit for months.
The other option you have at your disposal is renting a room at someone else’s place. The main advantage of this is you have choice of how close to work or university you live, potentially saving you significant amounts of money in travel expenses, not to mention time. Rail tickets and car expenses are very expensive nowadays so this is clearly a consideration. Repair costs and property upkeep are also other things you don’t have to worry about.
Easyroommate is a website that connects people wanting to rent a room with those letting them out. Their UK site contains over 50,000 listings in 30,000 locations across the whole of the UK and there are around 2,500 new sign ups daily.
Visitors can post a room or person profile on the site for FREE and upgrade to a membership to make contact with other users. By signing up using the link below you can take advantage of this money saving technique.
2. Cashback
I wish I knew this existed when I paid for my holiday to Japan a couple of years ago. Overall I paid over £3,000 in flights and hotel and didn’t realise I could’ve earned an average of 4% cashback for absolutely free. That’s an extra £120 I could’ve saved with very little effort as the concept is very simple.
You simply create an account with a cashback website and visit the retailer’s website (e.g. Expedia) using their link to purchase anything you would as normal. The thing to be aware of with cashback websites is to only buy items you actually need. There is no point earning 4% cashback on something that you wouldn’t have bought in the first place!
The site has over 6,000,000 members and includes over 4,500 merchants (from high street big names to smaller, niche online sellers). TopCashback also provides consumers with discount vouchers, which can be used in conjunction with earning cashback.
From big purchases such as furniture to everyday shopping at your local supermarket, make sure you don’t miss out on the opportunity to potentially save £100s. Again this is tax free money that easily trumps earned income.
3. FREE audiobook
Like anything in life, improving your personal finances is undoubtedly linked to your ability to find landmark books on the topic followed by the motivation to read them. Not all of us have access to the local library due to transport or time but almost all of us have a smartphone nowadays to read ebooks or listen to audiobooks.
The two I’d strongly recommend are Rich Dad Poor Dad and The Slight Edge, either of which you can get FREE from Audible if you subscribe to their free trial using my link below. I’ve actually published a review of RDPD here and will hopefully do the same with TSE very soon.
Reading or listening to books is one thing you can do to guarantee a great return on investment as you’re directly receiving advice and wisdom from amazing people all around the world. Nowhere else could you pay £15 and listen to Warren Buffett speak for hours on your favourite topic. But nowadays technology has made this very affordable, or even free!
I really hope you enjoyed my three tips on how you can save £500 every month. By clicking on those links I may or may not make a small amount of money to support this blog, at no extra cost to you.
To be honest I’m currently losing money with this blog but I don’t mind as it’s a hobby. I could easily spend a few hours locuming for £50/hour but choose to do this to also (hopefully) help you guys out so any support would be a bonus and would be really appreciated!
As always, you can reach out to me in the comment section below or at rory@ukdoctoronfire.com if you have any post requests, questions or just conversation! Hope to speak to you soon.
Hi Rory,
Good ideas as always! For us, renting out a spare room just isn’t an option we are willing to entertain – sure, we could probably knock a year off our FIRE date if we did, but we like the space just as it is – for us, family and friends. It also means if I want to cook naked I can (I wouldn’t recommend it as the fat can spit anywhere ;-))
I am a big fan of cashback / rewards cards etc. – I try and put everything I can on credit card, claim the rewards, and immediately transfer the money to pay it off into a savings account so I don’t run out of cash, and my current account goes down as if it were cash.
I am so going to go for the audible book from your link – didn’t realise you could get them for free, and as I have never listened or read RDPD then now I have no excuse 🙂
Hope the exams are going well – that stuff is way over my head 🙂
Cheers,
FiL
Hi FiL,
Agreed, privacy is really important especially coz I’m an introvert. Ah who knew cooking could be painful haha. Not sure how you’re managing in London out of all places but I take it you’re a still a DINK? Kudos for taking advantage of cash back – it’s literally free money.
Thanks in advance for using the link! Hope you enjoy RDPD, surprised someone as into FIRE as you hasn’t read it.
Rory
Hi Rory,
I enjoyed the company when I was younger, but now I have my other half, that is the company 😉 Yes – never underestimate the perils of the kitchen 😉
Yup – forever DINKs so that makes it easier. I finally cashed in all my airmiles last year to treat myself and the mrs. to a first class flight to South America – was it the best use? probably not. Did we enjoy it? Hell yes 🙂
No problem – I am trying to remember my login / reset my login details but not getting far 🙂
I’ve actually not read a lot on FIRE – I only recently read Your Money Or Your Life (within the last 12 months) – that’s it – I am too tight fisted to purchase them 😉
Cheers,
FiL
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