As much as we’d all like to, not everyone makes 7 figures a year, unfortunately. That’s simply the sad reality of most of the working class. The constant battle to make ends meet can greatly impact your saving habits.
While it’s important to make sure your bills are paid and food is put on the table, there’s absolutely no reason for you to put your dreams of buying a house, car, or retiring worry-free on the back burner.
Saving money on a low income doesn’t mean you have to stop living your life to the fullest. It simply means finding a way to make the most out of your money while setting a little aside to contribute towards your future.
Let’s explore some of the best tips for saving money on a low income that won’t feel impossible to do.
Anyone who has to deal with a low income knows how far planning ahead can go. That said, if you’re constantly feeling like you’re barely living paycheck to paycheck, it may be time to make a few changes.
Without a set financial plan, you may find your money slipping away from your fingertips more quickly than it should. It’s important to take the time to sit down and think about where your money needs to be spent.
Financial experts like to follow a 50-30-20 rule where 50% of your income is allotted for your needs, 30% on your wants, and the remaining 20% goes into your savings.
This may or may not work for you, so it’s all a matter of building a budget that will help you keep track of your spending.
Your housing cost is one of your biggest expenses. According to the National Expenditure Survey, consumers spend around $10,080 on housing costs annually.
There are three things you can do to cut back on these expenses:
- Downsizing to a smaller home or apartment.
- Moving to a cheaper location.
- Rent out any extra rooms or space.
Trying to repay your debts can take a toll on your monthly budget, but it’s a necessity you can’t ignore. It may be challenging, but eliminating your debt more quickly will free up your money so you can use it on more important things like a home deposit.
From packing lunches for work to cooking your own meals, there are many ways to cut down on food costs. We don’t mean eating the bare minimum. Instead, you should look into cooking your own meals rather than eating out.
If you want to stick to a budget, you may even find meal planning helpful.
With cash on hand, it can be difficult to keep track of your money after paying the bills. One way to prioritize your savings is by setting up automated transfers each month.
This will allow you to set up your budget without having to worry about your savings and let you focus on your wants and needs depending on what’s left.
Saving on a low income doesn’t mean you have to live a boring life. There are many ways to have fun while living frugally. Here are some suggestions to consider:
- Take up hiking
- Practice cooking
- Take up gardening
- Watch movies at home
- Read a book
Libraries offer more than just free books. There are many free resources that they can offer such as:
It’s easy to lose track of your budget when all your money is in one place. To keep things organized and give you a clearer view of your spending habits, try the envelope method.
It’s simple — all you need to do is take a few envelopes, label them according to your expenses, and fill them with your allotted budget. And stick to these allotted amounts.
Banking costs are the bane of any low-income earner’s existence. Not only do they riddle you with unnecessary fees, but it can take a huge toll on your budget. To help you save in this area, it’s a good idea to look into fee-free banks.
If you own a car, then you’re probably spending several hundred dollars on it each month. It’s important to look into ways to minimize these costs, such as:
- Switch to a cheaper insurance company
- Try to pay off your car as quickly as you can
- Scrap the car and bike or commute to work instead
- Learn about doing minor car repairs at home
Savings not only help you prepare for retirement but also help you reach your dreams and act as a safeguard if you ever get laid off from work unexpectedly. There’s absolutely no reason for you not to save money.
We hope this list has given you an idea of how to save even with a barely manageable income.