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How can I save with a Low Income?
Every day, many people are asking “How to save money on a low income?” This is because Inflation is constantly rising, and the economy is becoming more challenging for the masses. Let’s not forget to mention the excessive bills and high tax rates. But sadly, the minimum wage remains the same and is barely enough for most people to survive. This is why it is important to save and invest.
We know that many of you would love to save money but cannot because you live on a low budget. This means that you earn less than average, or around the poverty level. It is very challenging for low-income earners to save because there isn’t much money left after paying bills. But even though it might seem difficult, it’s not impossible to save money on a low income. There is a strategy to knowing how to save money on a low income.
This strategy is what we will discuss today, and it has been proven to work by many top entrepreneurs. In this article, we will show you the importance of savings, and then we would answer your question on how to save money on a low income.
What is saving?
Many years ago, when I was still a kid, my dad would give me money to buy treats. When there is a little change left, he would tell me to keep it and save for the rainy day. He was instilling the attitude of saving in me.
Saving is the part of your income left after you subtract your spending from your income. It is the money you set aside to use in the future.
Importance of Saving
Saving has several importance and benefits especially to one on a low income. This is why it is very important to know how to budget money on a low income. Listed below are the importance of saving.
Emergencies: Emergencies are almost inevitable and very unexpected. You need to save in case of an emergency. It could be a health emergency, damage to property, hyperinflation, etc.
To Make Purchases: Saving helps generate income for making big purchases. Most people would rather collect loans or use credit cards but saving is an effective way to purchase something beyond your income.
Major Life Event: Saving can help prepare you for a major life event such as marriage, having a child, education, etc.
Compound Interest: Compound interest is the interest you earn on a deposit derived based on the initial deposit and accumulated interest
Long-term security and Financial Independence: Saving helps you become financially independent. It delivers you from living paycheck to paycheck.
Savings Allows You to Pursue your Dreams: If you don’t like your current job, saving can provide you enough money to pursue a career you love.
Investment: Imagine a profitable business opportunity coming your way but you don’t have money to invest. If you had savings, you can be able to take a hold of investment opportunities.
Vacation: Saving provides you with the money to embark on your dream vacation.
Retirement: Saving can help secure your financial status when you retire
Saving for Others: You can save to help others or leave an inheritance for your children.
How to budget Money on Low Income
Now that we have established what it means to save, we can now show you our strategies on how to save money on a low income.
Create a Budget
The first step to take to know how to save money on a low income is to develop a budget. A budget is a calculation of your income and expenses over a specific period. In other words, a budget is a plan you write down to know how much money you make and decide how you would spend it.
One of the major reasons why most people don’t know how to save money on a low income is because they don’t know how to budget their money. so whenever they receive their paycheck, they spend it recklessly. At the end of the day or month, they can’t think of anything tangible that they did with their money. A budget would show you how much money you make, and how you want it spent.
A budget helps you decide what you should spend your money on. This way, you wouldn’t end up spending recklessly on things that are not necessary. Without a budget, you would never be able to save properly. You can write out your budget by hand or use a spreadsheet or any budgeting app online.
Decide Your Priority
The next step on how to budget money on a low income is to decide your priority. This comes when you are writing your budget. You have to decide and write down where your money should be allocated to. If you don’t decide your priories you would find yourself spending needlessly on irrelevant things.
A man who does not decides his priority is like one that never locks the door to his house/ room. He would always live it open 24/7. Anyone and anything can easily walk into his apartment. Strangers, thieves, and rats can come in effortlessly.
When you can decide your priority, and someone uninvited comes to ask you for money or sell something to you, it would be easier to say no because such is not part of your budget. This can also help you to stop spending money on things you want and not what you need. Deciding your priority is a very important step to knowing how to save money on a low income.
Start Small
Starting small is one strategy most people underestimate and that is why they don’t know how to budget money on a low income. You don’t have to wait till you have a huge amount before you can begin saving. You can start small. The idea of saving is to keep money bits by bits till they compile into something very tangible. Don’t wait till you get something big, start small and you would accomplish big results over time.
Cut Off Unnecessary Expenses
Sometimes we spend a lot on things that are not relevant to us at the time of purchase. This is one major reason why most people don’t know how to budget money on a low income. The basic things we need to survive are food, shelter, transportation, and insurance. Any other thing beyond that is luxury. I’m not saying that luxury isn’t good. But when we are looking to know how to save money on a low income, we have to be able to identify luxuries and avoid them. But luxury is not that easy to identify, because people like to think of expensive wristwatches or fancy cars. Yes, those are luxuries but the real ones that secretly eat your income are in food, shelter, transportation, and insurance. That is why it is difficult to expose.
Food, for example, can be bought cheaply or expensively. Some restaurant food can be very costly when you calculate how much it consumes on your budget over time. Fast foods, shopping malls, and grocery stores are other things that can consume your budget. Plan your meal, or better still cook yourself. Avoid the temptation that comes from fancy delicious-looking food. Most times, you don’t need them. They are designed to entice you in other to get your money. Your apartment is another area to look into.
Don’t rent an apartment with additional rooms you don’t need. Don’t go for the expensive one when you can get the cheaper one. Remember you are trying to save money. When you can avoid luxuries, you would have taken a big step to know how to save money on a low income.
Pay off Loans and Avoid Debts
Debt is one of the major enemies to obtaining financial success and stability. Don’t get us wrong, we are not saying that every debt is bad. But you have to understand those loan companies are not set up to help you. Loans are given out to make more out of you. You have to understand that most times, a loan is like a trap. It is very pleasing to the eyes but it can be devastating when you fall in it.
Avoiding debts makes our list on “how to save money on a low income” because once you fall into it, it is very difficult to save money especially for someone on a low income. The biggest problem with having debts is that you can’t really make decisions with your money. This is because your money no longer belongs to you. They belong to the people you are indebted to, and the more you delay, the more interest adds up.
Taking up loans is not necessarily bad. But deciding when you really need it (and can’t do without it) is key. But if you want a piece of good business advice, stay away from it. Instead, look for ways you can invest your little income and make the money you need. Or save up like we are teaching you now.
Look after your Health and Eliminate Bad Habit
This might not be the typical financial advice but there are good reasons why it made our list on “how to budget money on low income”. If you don’t look after your health and well-being because you want to economize, you are likely to spend all your savings on health problems. You need your health to enjoy your money, so look after it. Don’t skip doctor’s appointments, do regular check-up if you need one, and cultivate a healthier lifestyle. This includes exercising, eating healthily, resting well, and getting rid of bad habits.
By bad habits, we mean excessive drinking and smoking. It doesn’t help your health and neither does it contribute to your finances and savings. If you have one of these as an addiction, you should visit a specialist.
Use Automation to Save and Pay Yourself
As we are rounding up our list on “how to save money on a low income”, it is important we discussed this very crucial point. Many of the top billionaires including Warren Buffett used this principle.
We are to money what kids are to sweets. Kids are very vulnerable to sweets and they can eat as much as it’s available without minding the health risks. That is why they need an adult to supervise them. We do the same with money. We hope to spend when it’s not available, but when it is, we spend it all, and the circle repeats itself. You need an adult in your life to supervise you and that adult has to be you. So whenever you receive your paycheck, it is very significant for you to pay yourself.
To pay yourself means to allocate how you really want your paycheck to be spent. When budgeting your paycheck, remove your bills, savings, and a portion for your personal use. The most effective way to do this would be by automation. With each paycheck, set an automatic transfer that will move your savings into a savings account. Pay your bills and pay yourself. This way, you would be able to prevent yourself from needlessly or recklessly spending your income. This is a very effective strategy to knowing how to save money on a low income.
Have a Set Goal
The only way to stay inspired when saving money is to have a goal. Having a goal is also like having a target. Are you saving to buy a car, house, pay off a loan, education, investment, etc? You have to have a goal. This would keep you always inspired. Having a set goal sums up our list on how to save money on a low income.
Conclusion
Saving money might not be easy at first but eventually, you will get used to it. The most important thing, for now, is that you start ‘today’. Don’t wait till tomorrow. Start now. Little droplets can make an ocean. We hope you enjoyed our strategy on “how to save money on a low income”. We would be expecting to hear your testimonies in the nearest future. Bye.
