A teacher from Bristol has proved that you don't need to be a millionaire to survive the credit crunch: Kath Kelly has written a book called How I Lived a Year on Just a Pound a Day, after she did just that.

Her descent into self-imposed penury began when she was worried about how she was going to afford a decent wedding present for her brother and his fiancée on her £10,000-a-year income. The 47-year-old told friends of her plans so that she would not be able to go back on them, though she soon wished that she could. However, once she had worked out how to survive on less than half the cost of a cup of Starbucks cappuccino she found it a lot easier than she had expected.

The £1 a day did not include the rent of her room in a shared house or the utility bills, which were all paid in advance, but had to cover everything else, including clothing, food and toiletries. “I discovered that if you buy the supermarkets' basics ranges, some things are very cheap. I bought three bars of soap for 18p. Asda also sells shampoo for 27p a litre. It isn't great but it does the job.”

From the outset she set some strict rules for herself. If she spent less than £1 a day she could carry the change over. This effectively ruled out bulk-buying as a way of saving cash. She also decided not to freeload from friends.

“That wouldn't have been playing the game and by the end of the year I probably wouldn't have had any friends left anyway,” she said. Instead of being a dampener on her social life, the pledge of poverty meant that she was constantly attending free events, from book launches to gallery openings ... anything that might have nibbles or even a buffet table.

Buses were out, so every journey had to be made on foot or bicycle, and as she could not afford calls on a mobile phone she would visit friends or leave them notes if she had anything to tell them.

“As soon as they realised I didn't intend to be a freeloader they were fine about it, though some people did try to persuade me not to go through with it,” she said. “Instead of meeting for lunch in a café, as we used to, we'd take sandwiches and a Thermos of home-made soup and eat on a bench in the park.” Miss Kelly made the soup every morning from chicken carcasses given away by her local butcher and whatever vegetables she could find. She discovered that delis often sell whatever is left over at the end of the day very cheaply because they cannot keep it overnight.

She steered clear of charity shops - there was rarely anything that she could afford - but found church jumble sales a good source of cheap clothes. She kept her eyes on the ground and, during a year in which she walked almost everywhere, picked up a total of £117 in loose change. She said: “I kept it for emergencies but in the event I didn't need it so at the end of the year I gave it to charity.”

She even managed to afford a holiday, hitch-hiking to her brother's house in Brittany.

It took colleagues at the English Language Centre in Bristol, where she has a part-time job teaching foreign students, six months to discover what she was doing. Some had wondered about her recent enthusiasm for student trips, particularly when there was the possibility of free food on offer.

At the end of the year Miss Kelly was able to buy her brother and his new wife a £1,300 life membership of the National Trust as a wedding present with her savings, as well as contributing to the cost of the reception. She had also found true love, having met her boyfriend while helping out at an organic farm.

During the 365 days of her experiment she went over budget only once, when she had to visit a dentist.

The experience has dramatically changed her outlook on life. She said: “Before, I enjoyed spending money as much as anyone, but now I don't see the need for expensive things. I still live very frugally and don't spend much at all, though it is probably more than £1 a day.”

- How I Lived a Year On Just a Pound a Day, by Kath Kelly, is published by Redcliffe Press for £6.99