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| Ⓒ Provided by Kinda Frugal |
By Sara Graham, Kinda Frugal
If you’re living paycheck to paycheck making barely enough to get by, saving even a small amount of money seems out of the question. Saving for bigger goals, like paying for college or buying a house, seem like impossible dreams.
But don’t give up!
You can save money with a low income. You just have to concentrate on what you can do to improve your financial situation. Don’t think about what you can’t do.
Build the saving habit. That’s most important. The money will add up in time.
Here are 15 ways to save money on a low income:
Read More: 12 Quick and Easy Ways to Save More Money
1. Save What You Can
Saving something beats saving nothing. You can put money aside without a winning lottery ticket or living on ramen noodles. Embrace the idea that no amount is too small for your savings, especially if you’re on a tight budget.You’re familiar with piggy banks, so you know how this works. Whether it’s a few coins or a few bucks, once a week put whatever you can in a separate savings account that pays interest, then don’t touch it.
You might not save $2,500 in one year this way, but I bet you can save $250. That’s less than $5 a week. Whether you make $15 an hour, $40k a year, or another amount, $5 a week should be doable.
Saving money is important for your financial future. And saving something is better than saving nothing. Just start.
2. Pay Yourself First
You can save money with a low income if you make saving your top priority. You do that by paying yourself first. That means every time you get paid, put some money away separate from the money you use for regular expenses before you do anything else.Even if you’re broke or in debt, pay yourself first, at least until you have $1,000 put away in case of emergency. Then you can work on getting out of debt and slowly increasing your emergency fund until you have three to six months of living expenses saved.
Don’t worry about how much money you think you should save or how much someone your age is supposed to have in the bank by now. Focus on what you can save. If that means saving $5 a week, start there.
If you have a 401k at work, save at least 1%. It comes out of your earnings pre-tax, which means you won’t see it and you’re paying yourself first. If your employer matches your contributions, you just doubled your savings.
3. Automate Your Savings
Choosing to save overspending is often difficult. Having to make that choice several times a month drains your willpower. If you keep all your money in your checking account, you’re more likely to spend it.Automation is the best way to ensure you save. You take things that can train wreck your savings like forgetfulness and a lack of discipline out of the equation when you automate. The less you have to think about it, the better.
Again, it doesn’t have to be 20% of your income amount. Set up an automatic transfer of whatever amount you can. You can always increase it later.
By automating your savings, you’ll never have to think about it. Every time you get a paycheck, a little something goes into your savings account. If you’re sick of having no money in your savings account, automation will help.
4. Start a Budget
It’s hard to get anywhere without a map. Your budget is your financial roadmap. If you’re struggling to save money with a low income and you’re not budgeting your money, it’s time to create a budget.When you create your first budget, you’ll take a hard look at your monthly expenses. You will probably spot some bad spending habits, ways to lower spending, or opportunities to trim unnecessary items completely out of your budget.
You can also build a savings goal into your budget. Doing so ensures you save instead of just saving what, if anything, is left at the end of the month.
Once you eliminate unnecessary expenses and start your budget, you might find you have more than you thought. Getting your savings on track could be a matter of making different choices and sticking to your budget.
5. Wipe Out Debt
Credit card debt is a big reason many people can’t save money. High-interest debt holds you back from saving and reaching your financial goals. Carrying a balance can cost you three or four figures in interest alone.Make getting out of debt a top priority. You still want to have an emergency fund in place, before you go all out toward paying off your debt. But once you have some money set aside, eliminating debt will help you reach your goals.
Once you eliminate debt, you can put the money that went toward debt payments to better use. You can focus on buying a home, putting your kids through college, or aggressively saving for retirement when you’re debt free.
6. Lower Your Housing Expenses
Cutting your spending by budgeting, buying less of what you don’t really need, and shopping smarter go a long way toward helping you save money with a low income. If you spend less on necessary major expenses, such as housing, transportation, and food, you can dramatically change your financial outlook.Here are a few ways to lower your housing costs:
- Consider moving. Could you save by moving to a new location? Moving from the city to the suburbs or to a different part of town might save you a lot of money. Finding an apartment that’s $100 cheaper will save you $1,200 a year and probably won’t affect your quality of life much.
- Downsize. Smaller places cost less much of the time. Are you currently using all the space you’re paying for? Could you do with a smaller home or apartment?
- Rent out a room. If you have space available, you could rent it out to lower your housing costs. You could use a platform like Airbnb to find short-term renters for extra money or try to find longer-term tenants to share expenses.
Read More: 10 ways to trick yourself into saving money
7. Spend Less on Your Car
Owning a car can cost you thousands of dollars a year. All the money you put toward car payments, insurance, routine maintenance, unexpected expenses, registration fees, and gas can prevent you from having any money left to put in your savings account. Here are a few ways you can lower your auto expenses:- Shop around for car insurance. If you do some comparison shopping, you might save hundreds per year by switching providers.
- Pay off your car faster. If you can eliminate your car payment, you’ll free up cash and avoid the high cost of financing.
- Do basic maintenance and repairs yourself. Leave the major repairs to the pros, but minor fixes are cheap compared to what a dealership or mechanic might charge you.
- Drive less. Use public transportation, carpool, bike, or walk. You’ll lower fuel costs and save some wear and tear.
8. Spend Less on Food
Overspending on food is too easy, no matter what your income is. We’re surrounded by temptation with restaurants, fast food, and convenience stores everywhere.It’s not just eating out. Supermarkets do a good job at separating you from your money too. How many times have you walked out of a grocery store with items that weren’t on your shopping list?
You can always justify blowing up your food budget since hunger is real and you have to eat. Besides lowering your restaurant spending, there are a couple of simple things you can do that make spending less on food easy.
Plan your meals for the week ahead before you go shopping. But don’t start by looking through your recipe collection. Instead, go over the store flyer and look in your cabinets before you plan anything.
Make your meal plan based on what you already have on hand plus what’s on sale. If you only purchase items that are on sale and don’t buy anything you don’t need, you’ll save money automatically.
Spend a few hours prepping meals for the week. You’ll be less tempted to pick something up or have food delivered if you know what you’re having and it only takes a few minutes to get it on the table.
9. Mind Your Health
You need your health if you want to save money. You also want to enjoy your life once you reach your savings goals. So take care of yourself.Healthcare is expensive, but skipping doctor visits is a terrible way to save money. Preventive care is often 100% covered by your insurance. For care that isn’t completely covered, a co-pay is a small price to pay to make sure you’re healthy.
Not going to the doctor means you could be looking at serious medical bills down the road. Regular checkups help with prevention and early detection.
You can also take preventative measures on your own. Try living a healthier lifestyle by eating better, exercising, getting enough sleep, and ditching unhealthy habits.
There isn’t much you can do about the cost of health insurance, but going to the doctor and adopting healthy habits could save you a bundle long term.
10. Eliminate Bad Habits
If you’re trying to save money with a low income, eliminating bad habits will help you do that.Vices cost money. Sometimes a lot of money.
If you have habits that are negatively affecting your financial well-being and your physical and emotional health, consider quitting them. It won’t be easy, but it will be worth it in more ways than one.
There are bad financial habits that should also be eliminated. Paying unnecessary banking fees, like late charges and overdraft fees, can be avoided once you sharpen your budgeting skills.
11. Cut Spending on Entertainment
From a purely financial standpoint, your entertainment costs can always be reduced. That doesn’t mean you have to give up fun or learn to love staring at your walls. There are plenty of free and low-cost ways for you and your family to have fun.Here are some entertainment options you can enjoy without spending much:
- Host potluck dinners instead of going out to dinner with friends
- Get outside and walk, hike, or ride your bike
- Visit your local library
- Stay home and have movie night or game night
- Explore a museum
- Take a stroll through a park
- Pack a lunch and have a picnic
You might want to consider getting rid of cable as well. With all the streaming services available now, cable isn’t the only game in town anymore.
Are you spending a lot of money on channels you don’t watch? Do you spend more time watching Netflix or another streaming service? If you can’t do without live TV, look into YouTube TV or Sling TV and do a price comparison.
Read More: How to Save Money Without a Bank Account
12. Commit to a No Spend Month
While there are plenty of things you could stop buying to save money, a no-spend challenge takes it a step further. A no spend challenge is an aggressive saving strategy that can put a large chunk of change in your pocket relatively quickly.With a 30-day no-spend challenge, you only spend money on necessities like rent, food, utility bills, and other needs. In one month, all the money you would’ve spent on things like entertainment, eating out, and other wants can go right in your savings account. The experience is also educational.
Seeing that you can get by without all those things you thought you had to have might change your outlook on spending money. It also forces you to take a hard look at how you define needs and wants. You’ll find areas to cut back so you can prioritize saving or getting out of debt.
If you think a no spend month might be too difficult, there are easier and more fun money-saving challenges you can do that will help you stay motivated, build good money habits, and build your savings account balance at the same time.
13. Do It Yourself
Things break. When you’re living on a low income, you can’t afford to replace everything that needs fixing. Most times, learning how to DIY can save you a lot of money.Jerry and I have completed plenty of maintenance and repair jobs involving our house, car, yard, and furniture. Necessity and a lack of money were all the motivations we needed to learn new skills.
Instead of paying someone to do the work for you, it’s well worth your time to learn how to do minor repairs around the house yourself. YouTube, websites, and blogs are full of detailed tutorials and how-to videos. We saved hundreds of dollars on one easy repair alone based on two separate quotes we got.
Some things are undoubtedly best left to professionals for safety purposes. For example, we don’t mess with electrical work. But the next time the toilet won’t stop running or the walls need painting, we’ll probably handle that on our own.
14. Increase Your Income
Saving money on a low income is tough. You might reach a point where you can’t lower your expenses any further. Or you might want more flexibility for peace of mind.When you’ve gone as far as you can with slashing your spending, increasing your monthly income might be the best way forward. You can do that by getting a raise, getting a second job, or starting a side hustle for extra cash.
A raise is out of your hands. If you can get a raise, however, it’s the fastest path to more money.
Both working two jobs and getting a side hustle going require using your free time to pursue money-making opportunities. A side hustle might offer more flexibility while working two jobs might get you an additional paycheck faster.
You don’t have to choose between lowering spending or increasing income. You can do both.
15. Bank Your Extra Paycheck
If you get paid every two weeks, there will be 2 months out of the year when you get 3 paychecks. If you budget your money as you normally do based on 2 paychecks, you can save the entire third check.See more at Kinda Frugal
