How To Save When You're Skint

Laura Starkey explains how to squeeze extra money from your monthly budget - and some smart ways to stash it.

This article appeared as email in our Cracking the Credit crunch email series.

We're just over halfway through April now, so hands up all those who are counting the days until their next salary payment arrives.

If you're holding an arm aloft, there's no need to feel ashamed. (In fact, I'm having to type this one-handed.)

No matter how much we make, many of us find that we spend every last penny of our earnings. Somehow, despite having a regular income, it's easy to end each month skint.

Oh well. As long as you aren't in debt, it doesn't really matter. Does it?

Hey, Big Spender!

A lot of people certainly seem to think that spending is more important than saving. According to debt charity Credit Action, around 14m adults have no savings or investments.

In my opinion, saving should be high up on everyone's financial priority list -- especially at the moment, as our economy seemingly heads towards a slowdown.

ONS research scarily suggests that half of all UK households could survive for less than a month on the amount they have saved, should they need to.

But how do you save when you don't seem to have any spare cash?

Five Ways To Squeeze More From Your Salary

Switch your current account. If you stay in the black, there are lots of current accounts that offer brilliant rates on balances - thus making more of your money. For example, Alliance & Leicester's Premier Direct Current Account offers a whopping 8.5% interest, fixed until the end of next April.

Alternatively, if you go into your overdraft every month, get a current account with a low interest rate. Read up on The Best Overdraft Rate In Town.

Slash your bills. Use price comparison sites for everything you can, from CDs and books (try Find-cd.co.uk and Bookbrain.co.uk for good deals) to gas and electricity and insurance. Once you've know the price a competitor is offering, don't be afraid to haggle with your existing providers.
Shop smart! Cashback websites such as Quidco can cut the cost of online shopping by giving you a percentage of the commission they earn. Alternatively, cashback credit cards are a great option for anyone who pays off their balance at the end of every month. And of course, The Motley Fool publishes bi-weekly articles on Discounts and Deals, with offers on clothes, homewares, electrical goods and outings.
Shift down a gear. If you buy premium brands, experiment with a cheaper range. This applies to almost everything, from supermarket meals to moisturiser. You may barely notice the changes, and they could shave a significant amount off your shopping bill. Shifting down a gear also means slowing down. If you take time to plan your spending, it's less likely to get out of control. I find deciding what meals I'm going to cook each week before going to the supermarket very useful. When I simply shop for items or ingredients, I'm always suckered into spending more! Read Fight Back Against Rising Food Prices for more tips.
Create a Big Brother budget. Knowing how much money you have going into and out of your accounts each month is important.

If you tend to over-spend, you need more control over your cash. One way to get it is to set up a system of direct debits that will siphon off money for bills, mortgage/rent payments, spending money and - you guessed it - savings, into separate places.

Also, when it comes to managing your money, I can't recommend internet banking highly enough. Being able to see the balance of your accounts at the click of a button can be incredibly helpful for big spenders!

Where To Stash Spare Cash

If you try the tips featured here, hopefully you'll soon be able to start saving.

Don't be put off if you can't spare huge sums - saving regularly now sets you on the right road for the future.

When it comes to deciding where to stash your savings, my recommendation would be to use a Cash ISA. Thanks to the new rules, you can now save up to £3,600 tax-free - and there are six currently out there with great interest rates.

Some ISAs, such as Scarborough Building Society's Notice ISA, require that you give 30, or even 60, days' notice to get at your savings - a bonus for those who struggle with self-control.

Other ISA accounts even require you to commit to a regular monthly payment. As long as you can afford it, these can be a good bet. The Regular Saver Cash ISA from Dunfermline Building Society offers a spectacular 6.85% interest on balances as long as you pay in a minimum of £10 per month.

While starting to save can be difficult, it really is worth the effort - and the sooner you begin, the better, thanks to the miracle of compounding.

Some might say you can't put a price on peace of mind... I say, pooh! You can, and that price can be as small as a spare £30 or £40 per month.

More: Six Cracking Cash ISAs |What Not To Buy |The Smart Way To Save With The Least Hassle | Earn Cashback On Everything!