I Saved £5k on £25k a Year (And You Can Too) – Here's My Messy Journey

By HOAR Team 15 June, 2025 8 mins read 193 Views

God, where do I even start with this.

Back in 2019, I was earning exactly £25,400 at my marketing job in Manchester, living paycheck to paycheck like most people I knew. My mum kept asking when I'd start "being sensible with money" and honestly? I felt like a complete disaster every time bills came in. Then my flatmate Sarah mentioned this 50-30-20 thing her financial advisor friend had told her about, and I thought... why not give it a shot.

Spoiler alert: it actually worked. But not in the way I expected.

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The Reality Check That Changed Everything

First thing I did was sit down with a massive coffee and my laptop on a rainy Sunday in February. I listed every single penny coming in (my salary, the occasional £20 from selling stuff on Vinted, even the £15 cashback I got from that dodgy survey app). Then came the brutal part – writing down where all my money was actually going.

Rent: £650. Bills: roughly £180. Food: way more than I wanted to admit (around £300 because I'm terrible at meal planning). Transport: £85 for my monthly bus pass.

The leftover amount? £247 on average.

That's when I realized I'd been spending nearly £200 a month on random stuff without even noticing. Coffee shops, impulse Amazon purchases, that Netflix subscription I forgot about, plus two other streaming services I barely used. It was embarrassing, honestly.

Why the 50-30-20 Rule Isn't Actually Magic

Everyone talks about this rule like it's gospel – spend 50% on needs, 30% on wants, 20% on savings. On my take-home pay of about £1,773 per month, that would mean saving £354. Which sounds amazing in theory.

Reality check: it's nearly impossible when you're starting out.

My "needs" were eating up way more than 50% because rent prices in Manchester are absolutely mental. So I modified it. Started with 60-30-10 instead, aiming to save just £177 per month. Still felt ambitious but at least achievable.

Some months I managed £200. Other months (like when my laptop died and I had to replace it) I saved nothing at all. The key was not giving up completely when I had those zero-saving months.

Small Wins That Actually Add Up

Here's where things got interesting. I downloaded this app called Plum after my colleague James wouldn't shut up about it. It rounds up your purchases and saves the change automatically – so when I bought a £3.40 sandwich, it would save 60p for me.

Sounds tiny, right? But I was saving an extra £40-60 per month just from roundups.

Then I got obsessed with the "1p challenge" – you save 1p on day one, 2p on day two, and so on. By December, you're putting away £3.65 per day, which felt manageable because it builds up gradually. Ended up with £667 from that alone.

The weirdest one was the "rainy day" feature that saves money every time it rains in the UK. Living in Manchester, this was basically free money. Saved £89 just from our miserable weather.

The Subscription Purge (AKA My Digital Detox)

This part was painful but necessary. I went through my bank statements and found subscriptions I'd completely forgotten about:

- Spotify Premium (keeping this one, obviously) - Netflix (shared with my sister now) - Amazon Prime (cancelled, then immediately regretted it) - Some meditation app I used twice (£7.99/month for six months... ouch) - A language learning app I downloaded during lockdown optimism - Two different cloud storage services

Total monthly savings: £43. Not life-changing, but it meant I could afford to put away an extra £500+ per year without changing my lifestyle at all.

Emergency Fund: The Boring But Essential Bit

Financial experts love saying you need 3-6 months of expenses saved up. For someone on £25k, that's roughly £5,000-£10,000 sitting in an account doing nothing exciting.

I started with a much smaller goal: £1,000. Just enough to cover a major car repair or replace a broken laptop without having a complete meltdown.

Took me about 8 months to hit that target, and honestly? The peace of mind was incredible. When my boiler packed up in January 2020, I could actually afford to get it fixed immediately instead of spending three days in a freezing flat wearing every jumper I owned.

Currently sitting at £3,200 in my emergency fund, which feels like the right balance between security and not having too much money earning terrible interest rates.

Where I Actually Keep This Money

Started with a basic savings account earning about 0.1% interest (basically nothing). Then I discovered that online banks like Marcus and Chip were offering 4%+ on easy access accounts.

Moved my emergency fund there immediately. The difference between earning £3 per year and £128 per year on the same £3,200 balance was a no-brainer.

For longer-term savings, I opened a Cash ISA with Nationwide offering 4.75%. You can save up to £20,000 per year tax-free, which is way more than I'm managing right now, but it's nice to know the option's there.

Also started putting £50 per month into a Stocks & Shares ISA through Vanguard. Terrifying at first because the value goes up and down constantly, but over two years it's grown to about £1,400 from £1,200 in contributions. Not amazing returns, but better than cash.

The Stuff That Actually Moved the Needle

Loyalty schemes are boring but effective. Tesco Clubcard, Boots Advantage Card, even the Co-op membership thing. I probably save £20-30 per month just from using these consistently.

Switching providers was huge. Spent one weekend comparing energy suppliers and broadband deals. Saved £180 per year on energy and £144 on broadband by switching. Three hours of admin for £324 annual savings felt like a decent hourly rate.

The biggest game-changer though? Meal planning. I know, I know – it sounds incredibly dull. But planning meals for the week and doing one big shop instead of daily "what am I eating tonight" trips to Tesco cut my food bill from £300 to about £180 per month.

What I Wish Someone Had Told Me Earlier

Start stupidly small. Like, embarrassingly small. My first automatic transfer was £25 per month because that felt manageable. Once that became normal, I increased it to £50, then £75.

Don't beat yourself up about the months when you save nothing. Life happens. Cars break down, friends get married, Christmas exists. The important thing is getting back to it the following month.

Automate everything you possibly can. Direct debits, standing orders, apps that round up purchases – anything that removes the daily decision of whether to save money or not.

And honestly? The 50-30-20 rule is more like a rough guideline than a strict formula. Some months it's 65-25-10. Other months it's 55-35-10. The exact percentages matter less than consistently putting something aside.

After two and a half years of this approach, I've got £5,847 spread across emergency savings, ISAs, and investments. Not enough to buy a house deposit in Manchester (not even close), but enough that I sleep better at night knowing I'm not completely screwed if something goes wrong.

Plus my mum finally stopped asking when I'd get my act together financially. Small victories.

Frequently Asked Questions

How does inflation affect the value of money?

Inflation refers to the general rise in prices over time, which erodes the purchasing power of money. As inflation increases, each unit of currency buys fewer goods and services, meaning that the value of money decreases in terms of what it can purchase.

What is the definition of money?

Money is a medium of exchange that facilitates transactions for goods and services. It serves as a unit of account, a store of value, and a standard of deferred payment, allowing individuals to compare the value of diverse products and services.

What are the benefits of having an emergency fund?

An emergency fund provides financial security by offering a safety net for unexpected expenses, such as medical emergencies or job loss. It helps prevent debt accumulation, reduces stress, and allows for better financial planning, ensuring that individuals can navigate unforeseen circumstances without significant hardship.

How can I budget my money effectively?

To budget effectively, start by tracking your income and expenses to understand your spending habits. Set realistic financial goals, categorize your expenses, and allocate funds accordingly. Regularly review and adjust your budget to ensure it reflects your current financial situation and objectives.

What are the different types of money?

The main types of money include commodity money, which is based on physical goods like gold or silver; fiat money, which is government-issued currency not backed by a physical commodity; and digital currency, which exists electronically and is often decentralized, such as cryptocurrencies.

What are the risks associated with investing in the stock market?

Investing in the stock market involves several risks, including market volatility, economic downturns, and company-specific factors that can lead to losses. Investors may also face liquidity risk, where they cannot sell an investment quickly without incurring a loss. Diversification and thorough research can help mitigate these risks.

What are the main functions of money?

The primary functions of money are as a medium of exchange, facilitating trade; a unit of account, which provides a standard measure of value; a store of value, allowing individuals to save and transfer purchasing power over time; and a standard of deferred payment, enabling credit transactions.

Statistics

The average return on investment for the S&P 500 over the past 90 years is about 10% per annum.
According to the World Bank, around 1.7 billion adults worldwide remain unbanked, lacking access to basic financial services.
As of 2021, the median household income in the U.S. was approximately $67,521, according to the U.S. Census Bureau.
According to a survey by the Financial Industry Regulatory Authority (FINRA), about 66% of Americans could not correctly answer four basic financial literacy questions.
The average cost of raising a child in the U.S. is estimated to be around $233,610, according to the U.S. Department of Agriculture.
Research by the National Bureau of Economic Research found that individuals who receive financial education are 25% more likely to save than those who do not.
According to the Federal Reserve, approximately 39% of Americans do not have enough savings to cover a $400 emergency expense.
In 2020, the average retirement savings for Americans aged 60 to 69 was approximately $195,000, according to Fidelity.

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How To

How To Develop a Good Saving Habit

Developing a good saving habit begins with setting clear financial goals. Determine what you are saving for, whether it’s an emergency fund, a vacation, or retirement. Start by automating your savings; set up a direct deposit from your paycheck into a savings account. Aim to save at least 20% of your income, gradually increasing this amount as you become comfortable. Track your spending to identify areas where you can cut back and redirect those funds to your savings. Regularly review your savings progress and adjust your contributions as necessary to stay motivated and achieve your goals.

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