How to squeeze extra cash from your salary

If you're struggling to put aside some spare cash each month, just follow these simple tips.

This article was first sent to readers as a '360 degrees' email.

I got paid last week. And for a brief moment I felt elated - I had money again! Hurrah!

But, like I said, it was a brief moment. Only a few days have passed and already my bank account is looking decidedly less healthy, with most of my money being zapped back out again to pay my bills.

So yet again I'm already counting down the days until my next pay packet.

Savings tips

Here at lovemoney.com we always suggest keeping three months' salary in an instant access savings account to act as a cash cushion. But how many of us can confidently say we have sufficient funds in our savings account?

Many of us are feeling the pinch on our finances right now, so it's even easier to find ourselves skint by the end of the month. And that means saving becomes even more of a challenge.

But you might be surprised at how much you can save by simply making a few lifestyle adjustments. In fact, according to Halifax, if you give up a few little luxuries each month, you could save yourself £3,698 each year! Just take a look at the following:

I think you'll agree that it's pretty impressive stuff!

However, saving money doesn't only have to involve sacrificing the things you love. So I've come up with five top tips to help you boost your savings another way:

1) Cut your energy bills

Taking the time to shop around and find a cheaper gas and electricity tariff can really pay off. Simply use our comparison tool to see whether there's a better deal out there for you. I switched my tariff a few weeks back and should now save an extra £205 a year! 

You're also likely to shave money off your bills by switching to an online tariff and paying by monthly direct debit. That said, there's been a lot of controversy surrounding monthly direct debits, with some suppliers being accused of overcharging. So regularly check your energy bills to make sure they show actual, rather than estimated, meter readings. And if your reading is estimated, phone your supplier to correct it.

2) Chop up your food bill

When you're zipping your trolley around the supermarket, it's far too tempting to plump for the big food brands you know and love. But by swapping these more expensive brands for supermarket own label products, you can easily save the pennies.

If you haven't already tried them, it's also worth checking out budget supermarkets such as Lidl, Netto and Aldi as these are generally cheaper than other big supermarkets. And remember to always stick to what's on your shopping list!

You can read more on slashing your food bills here.

3) Haggle for a better deal

Don't be afraid to drive a hard bargain. When you're purchasing a particular item see if you can haggle down the price. Or even ask if you can get some freebies thrown in for good measure. Many retailers are desperate for custom so you might be surprised how far you can push it! (Although you might want to spare a thought for the poor retailer before you go too far!)

I tried out my haggling skills just last week when I successfully renegotiated by mobile phone contract by simply stating how much I was prepared to pay. And I got my request without even having to threaten to go elsewhere!

4) Get cashback

Providing you pay off your credit card bill in full each month, there's no easier way to pocket some extra cash than by using a cashback credit card - simply earn as you spend! But do ensure you can afford to pay off your balance every month, otherwise you'll be hit with a ridiculously high interest rate.

Alternatively, if you're shopping online, use cashback websites such as Quidco, Top CashBack, Rpoints and GreasyPalm to get a percentage of what you spend back in cash!

5) Get paid for opening a current account

Fancy earning £100 just for opening a new current account? Well, that's exactly what you can do with the First Direct First Account, providing you pay in at least £1,500 a month. Note however that this account doesn't pay interest.

And if you're not satisfied with the account and decide to leave after six months, First Direct will give you another £100!

Alternatively, you can earn £5 a month with the Halifax Reward Account when you pay in £1,000 or more.

Where to put your spare cash

Hopefully by following the five tips above, you'll be able to put aside some extra cash each month. And that leads me nicely onto the best places to stash it...

If you feel more comfortable knowing you can access your funds whenever you wish, an instant access savings account is the way to go. And at the moment, the ING Direct Savings Account is offering a tasty interest rate of 3% AER. This rate includes a fixed bonus rate of 1.97% for one year.

But if you're prepared to lock up your funds in a fixed rate bond, it's possible to get an even better rate of interest. And one of my favourite accounts is the ICICI HiSAVE Two Year Fixed Rate Account which is offering an attractive interest rate of 4.1% AER. Alternatively, the ICICI one year bond pays out 3.9% AER. The only drawback is you'll need a deposit of at least £1,000 for both accounts.

And don't forget, now the new tax year has started, this is the perfect time to open a cash ISA and enjoy some tax free savings! The Barclays Golden ISA is currently paying a fabulous rate of 3.61%, which is the equivalent of 4.51% for a basic taxpayer, and 6% for a higher rate taxpayer. But do note this rate includes a 1% bonus for one year.

So remember, even if you can only afford to put away a spare £20 or £30 each month, it all adds up. And knowing you're building up a safety net to protect your future is most definitely worth the effort.

More: Why we're all starting to save | Offshore vs. UK savings accounts