Hey everyone! Today I have a guest post from Sharon. Sharon Pascoe has been a finance content writer for over 8 years and now writes for Finance and Lifestyle, the blog of First Quality Finance.
Have a low income? If you are one of the many people that earn the federal minimum wage of $7.25 or are working in a state that has a higher minimum wage, it is quite possible that you will have to manage your finances even more carefully and stretch your income.
If you don’t, you could fall into debt which can create unwanted, additional financial pressure.
In an ideal world, wouldn’t it be lovely if you were able to put some of your hard-earned paycheck aside in a savings account? That money could then be available to be used perhaps in the event of an emergency such as to repair your vehicle or to pay for an annual vacation.
Saving money when you don’t make much can be difficult but it’s not impossible. Here are 5 tips to help you save on a low income.
1. Make a Painless Budget
Everyone needs to budget in some capacity. If you are on a low income and have a family to support, it is probably more critical that you can stick to. Budgeting will likely be more serious for you than it will be for a high-earner who has plenty of wiggle room with their spending.
Quite simply, budgeting is where you allocate some or all of your income towards meeting your expenses
So, on a weekly or monthly basis, list all your household expenses such as food, rent, gas and transport and how much you spend on each of them. Ideally, one of those expenses should be a sum of money that you set aside in a savings account.
Of course, you need to track your income and expenditure to make sure that the total amount you spend each week or month does not exceed what you earn.
The trick is to keep your expenses low even if you feel they are already low because you can’t afford much. If you’re stressing out over affording housing, get a roommate or see if you can stay with family temporarily. If you can’t afford to dine out, learn how to cook amazing restaurant-style meals. If you can’t afford a car, use public transportation or carpool.
As you adjust your lifestyle to your income, you’ll find it much easier to budget and save some money.
Related: Learn how to create a budget you love and can stick to
2. Clear Your Debts
If you have debt on credit cards or through a payday loan, it is almost certain that you are paying a high rate of interest. If this is the case then, rather than place any spare cash in a savings account that is paying a very low rate of interest, you may be better using any surplus money to reduce and clear such liabilities as quickly as possible.
You won’t be able to save much with high-interest debt. When your income is limited it’s impossible to do both. Once those debts are paid off in full, then you can start funneling some of your money toward a savings account.
3. Save Money on Groceries
Obviously, you and your loved ones need to eat but you may be surprised just how much you may be able to reduce what you spend on your groceries just by making a number of changes to your shopping habits.
There are lots of ways you can do this such as:
- Plan ahead what you are going to buy when you visit the supermarket to avoid purchasing items that you don’t really need i.e. just buy essential items.
- Only shop once a week.
- Avoid pre-made meals including junk food and cook using fresh ingredients.
- Buy in bulk
- Use coupons
- Purchase generic brand items rather than named brands.
- Buy a frozen pizza rather than ordering a delivery pizza.
Any savings that you make in your groceries bill could be placed in a savings account.
Occasionally, if you have them, involve your children and help them learn to save by taking them shopping with you.
4. Reduce Your Housing Costs
The cost of your housing may include rent or mortgage payments, utilities and repairs and is usually your main outgoing. There are ways that you may be able to lower this outgoing or generate additional income such as by:
- Moving into cheaper housing.
- Maintain the property to reduce the possibility of expensive repair bills.
- Lower utility costs by switching supplier. Also, you could put a sweater on in the house in the winter rather than turn the heating up and make sure that all the lights are switched off when you go to bed.
- Make sure that you are on a competitive mortgage deal.
- When did you last review how much you are paying for your homeowners or renters insurance as you may be able to get suitable, cheaper coverage elsewhere.
- If you are renting, get a roommate to share the rent.
- If you own your home, rent out one of your bedrooms.
5. Get Rid of the Car
Cars are expensive. You have to pay to insure it, maintain it, and make repairs when necessary. If you’re struggling financially and can’t save much, ask yourself if you really need a car. If your family has two cars, can you sell one of them?
You may be able to trade your current car in for a cheaper one. Can you walk to work or get a bus? The cost saving here could be quite significant.
If you want to save on a low income, you’ll need to be creative a still commit to keeping your expenses below your means.
Have you done any of these things to save money regardless of having a fixed income?
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