How can you save money on a low income?
When you struggle to make enough money, saving can seem impossible. But don’t lose hope—saving is for everyone, even those living paycheck-to-paycheck. You just have to figure out at least one discretionary expense (if you have more than one) to cut. Another option would also be to find something you can do to earn a bit more.
Whether you’ve felt discouraged in the past by the whole thing with saving money or you’re just new to it, it’s never too late to put it aside. And we’re here to help you do that. Here are 9 strategies to learn how to save money on a low income!
Let’s get started!
1. Set a goal
In order to save money on a low income, you need to set a goal. This is one of the best ways to start. Whether you need to save $500, $1000, or more fast for a significant expense or create a fund for an emergency, picturing why you’re doing this will help you get it done.
Moreover, it helps a lot to write your goal somewhere so you can see it. It’s important to also imagine what you’ll do when you achieve that goal. It will keep you motivated and on track. When you feel tempted to spend some money that should go toward your goal, remember your long-term purpose.
Here’s a budget planner that can help you get organized!
2. Commit to a budget
According to personal finance experts, setting and sticking to a budget is one of the best strategies to save money on a low income. Create a list of your income sources and add all your necessary expenses, such as food, rent, and utilities.
Once you have accounted for your necessities, you can see exactly how much is left over. Whether it’s for a short-term or long-term goal, budgeting can help you map out where you need to go to get there.
It’s an incredibly effective tool that anyone can master. It may have a steep learning curve at first, but you’ll get better at it after the first month, and you’ll see that you can actually save money on a low income!
3. Choose what you cut
We’ve just mentioned that one way to save money on a low income is to create a list of your income and necessary expenses. As already said, it will help you see what your leftover income is.
In a perfect world, you’d put all of it into a savings account. If you can and manage to stay motivated to do so, at least for a month or two, that’s awesome—you may even be able to save $500 in less than a month.
But saving shouldn’t mean sacrificing everything that brings you pleasure and happiness. For instance, if you love going out to dinner with your spouse or friends at least once a week, you can still work that into your budget. Just make sure you set a spending limit, and you’ll be able to save money on a low income.
4. Commit to a savings percentage
Another great way to save money on a low income is to determine how much you want to set aside each month. According to personal finance experts, an easy and good starting point is 10% of your monthly paycheck.
As a general rule of thumb, you should allow up to 50% of your income for needs, leave 30% of your income for wants, and set aside 20% of your income for savings.
However, if you can’t manage that and still keep food on the table and a roof over your head, you can reduce the percentage you’ve set to put into savings, but don’t rush into things.
5. Pay yourself first
Next on our list of ways you can save money on a low income is by paying yourself first. This basically means prioritizing savings instead of spending. Put money into your savings before you budget for other stuff.
In other words, it’s kind of looking at your savings goals as essential rather than a luxury. In fact, if you’re living on a limited income, savings may actually be an essential rather than a want.
So, add your monthly savings to the list of necessary expenses we’ve talked about above, so you don’t let savings slide when temptation arises. There’s no way this strategy won’t work if you’re committed to it.
6. Earn a bank bonus
Another great way to save money on a low income is by earning a bank bonus. Many banks give sign-up bonuses to those who open an account. It’s an easy and quick way to earn up to $100 or even more in just a few minutes.
Compare offers from several banks to find the best one. It’s important to also consider terms and conditions such as account fees, ongoing minimum balances, bonus distribution rules, and minimum deposits.
If you don’t plan to keep the account open long-term, check out how long you must maintain it to earn the bonus.
Keep reading to discover other ways to save money on a low income!
7. Set up automatic savings transfers
Another strategy that can help you save money on a low income is to automate your savings. A recurring transfer automatically sends a specific amount from one account to another at the interval you set—monthly, quarterly, or yearly, for instance.
As you’re probably thinking, monthly transfers are ideal if you want to save a certain sum quickly. You can set an end date or let it continue until further notice.
It’s a convenient method to make sure you save, even when life gets busy. All you have to do is log into your bank’s online customer platform and schedule the transaction. Before you click “approve,” it’s important to ensure each transfer makes it into your monthly budget so you don’t double-spend.
8. Do a no-spending challenge
Next on our list of ways to save money on a low income is by taking a break from spending money. A no-spending challenge means not purchasing anything unnecessary for a set period, such as a day or week.
How long you do it is completely up to you. You can start small and gradually work your way up to a longer time frame, or you can try to do a month-long challenge right away. Once you’ve decided how long you want your challenge to last, you should establish your rules.
The goal is to go without buying stuff that you don’t need. This includes online shopping, new clothes, eating out, entertainment, or hair and nail services.
9. Cancel subscriptions or choose cheaper options
Cancelling subscriptions or choosing cheaper options can also help you save money on a low income. If you have multiple streaming accounts, make a list of each provider as well as the monthly cost for each of them.
Then, think about how much you use each one. If you haven’t used one in a few months, you may realize that you’re throwing the subscription fee out the window. If you’re still using it, consider whether you can replace it with something lower-cost or free.
For instance, multiple music streaming services, such as ad-supported Spotify and Pandora, play the same music with fewer “premium features”.
If you liked our article on ways to save money on a low income, you may also be interested in 8 Tried and Tested Ways to Kick Overspending.
