Introduction: Saving Money on a Low Income
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Little things add up over time, so you have to be resourceful. You have to be a bit creative with your money to do more with less.
With a little creativity, a little tweak of conventional rules, problem-solving skills, and an assessment of your current situation you can save a portion of your money no matter how little you earn.
Now, it’s unlikely that you have any individual influence on the overall economy. But you do have control over the actions you take with your own money.
We understand that saving money is difficult when you’re already living on a tight income. However, setting aside some money for the future is incredibly important and should be a priority.
Stay until the end of this post where we’ll give you one actionable step you can take right now to get started. Here are a few practical steps you can take to start saving on little income.
Understand your needs want
To make the best use of your limited income, you have to make informed decisions about how to allocate it.
The last thing you want to do is to ruin your earning on your short poetry. To avoid this, you must first understand your needs and wants.
Needs are things you MUST have to live (food, clothing, medical care, housing, transportation, and even insurance). Meanwhile, wants are the things you desire, perhaps to improve the quality of your life, they are not necessary for your survival, but may make living more comfortable and enjoyable.
Your wants can, and usually do, change over time and they differ from one person to the next, but your needs remain constant over time and for basically everyone.
Allowing some time before fulfilling your desire for an item is a good cheat when it comes to spending your money. Putting this into practice, you’ll notice that your desire for wants weakens over time.
In this way, you will be able to spend your money on more important items while saving a few rupees on the items that can wait. Now that you understand the needs and desires, you can create a budget to help stay within your means.
You can properly allocate each dollar to needs, savings, and wants. You’ll find, with time, it becomes easier to resist impulse buying and lowers the pressure to buy things to keep up a facade to your friends and family.
So, the next time you want to spend money, first ask yourself if you need it to survive, or if you just want it, and if you want it, wait 24 hours to see if it’s absolutely necessary.
2. Reduce Your Expenses
Another reason for identifying needs and wants is to reduce expenses. Many may disagree but entertainment is a want. What you really need is rest.
You want pleasure but you need peace.The average US spends more than $ 250 per month on entertainment. It may not take much, but during a year, it adds.
We agree that we all need some form of entertainment to help us unwind. But you don’t want to break the bank to do so.
You can reduce your overall expense, save money, and still have fun by cutting or eliminating some entertainment expenses. To accomplish this, you might think about cutting cable or satellite to save money on the channels you don’t watch.
Then choose a less expensive service such as Netflix or Hulu. You should also reconsider your memberships and unused subscriptions. How many of us have 3-4 different movie and tv show subscriptions, but in reality, we only watch one or two? When was the last time you used that gym membership you’re paying for every month? What about music, gaming, or even meal services? These expenses add up quickly.
Take a hard look at where you spend the money and think about removing ones you don’t need or use.If you find yourself out for tickets for music, movies and other events regularly, cheap options are also available.
You may want to see if there are any low cost or free events that you can sprinkle. If you are of courageous type, you can visit parks or recreational centers.
Go for a bike ride, or even walk in your neighborhood with friends. Many of these options offer low cost and still provide you entertainment and social interaction.
3. Hack Your Housing Costs
Most people’s biggest expense is housing. Taking 25%-50% of their earnings. You instantly boost your savings when you reduce or eliminate housing. To do so, you must devise a way to generate income from your home.
House hacking allows you to rent out a portion of your home to others. This could be a room or entire section of the home.
Take rental income and use it to pay a monthly mortgage while constructing equity in property. Are you the owner of a single-family or multi-family residence? Do you have a garage or storage area? Why not turn it into passive income streams and build flexible retirement plans by renting out unused space? You can earn extra money and get a taste of the landlord’s lifestyle.
Even if only temporarily, house hacking lowers your living expenses. The high cost of housing, allows you to pay for your living expenses using an asset you already own.
You can save money or pay off debt while also building equity.
4. Spend Wisely On Food
As you save money on housing, it’s also important to watch how much you spend on food so that you don’t invest your entire paycheck in it. Because every dollar counts when it comes to saving money, groceries are a big line-item expense when it comes to keeping your finances in order.
One smart way to spend wisely is to set a limit on the amount you should spend on food. Take out this amount in cash.
Then divide the cash into four weeks and place it in envelopes. label the envelopes (Week1, Week2, Week3 and Week4). Then, each week, discipline yourself to spend only one envelope.
Consider shopping with a list; packing your lunch, eating leftovers, sharing meals at restaurants, shopping off-brands and sales, using coupons, and eating from the value menu.
You should also think about reducing food waste through proper planning.
5. Add A Side Hustle
Here’s the truth, sometimes the reality is that you need to make more money. So as you try and reduce expenses to have more money to save, you should also look for ways to supplement your regular income.
A side hustle can build a freelancing business in your free time or is simple as dog walking after work. But increasing your opportunity to make more money gives you a higher grossing flexibility, which makes you fulfill your financial goals, such as getting out of debt and investing.
You gain the ability to rely on sources other than your day job. Even if you have no plans to leave your 9-5 job, knowing you have options is reassuring.
Imagine having an extra few hundred dollars per month, how would that affect your debt reductions or even your savings fund? Think you don’t have enough time? One beautiful thing about side hustles is that you can pick something that aligns with your schedule.
The world runs 24 hours, and the possibilities are near endless. If you’re willing to put in the effort to make it a success, this could transform your life.
You’ll come to realize that earning additional income is not only incredibly effective for getting out of debt and investing, but it gives you a level of comfort and security that only relying on your 9-5 job cannot.
6. Automate Your Finances
Finally, there are far too many choices that we need to make daily. Why not pre-schedule and pre-approve savings with today’s technology? Moving money from your checking account to your savings account is more of a “set and forget” with automation.
You simply set up the systems and never have to worry about saving money daily. This is a great way to achieve your financial goals. Also, if you are not saving enough, automating your finance can help you get better financial control.
You can set your system to move money to your savings or investment accounts monthly, weekly, or as you specify. Basically, you put your money on autopilot.
Your Actionable First Step
So, what could you do right now to get started on these practical steps to save on lower income? Take a moment to write down your “why”.
Why do you want to save? Is it to pay off your credit card? Is it to buy a more reliable car? Or maybe you’re beginning to realize that you haven’t started saving for your retirement? Writing down why you need to save will give you focus, then pick one, just one, of the practical steps we’ve listed in this post and incorporate it into your life.
Living on a low income shouldn’t discourage you from practicing good money habits such as saving. No matter how little you earn, you should prioritize putting a little bit away.
It may only be $5 or $10 dollars, but building wealth is a muscle that you have to exercise. So don’t be ashamed or afraid to start small.
Saving something is preferable to saving nothing at all.
