Saving money can be a low priority when you are dealing with limited funds. After all, you are only looking to get by at that point.
Many wonders how to go about saving money when you are making minimum wage. After all, how can you surpass your financial goals if you have such a low income?
If you want to improve your finances, you need to think just as much about the future as the now. No matter how little you are earning, you can save.
Saving Tips for Those with Low Income
Get Rid of High-Interest Debt
You will need to get rid of your high-interest debt as soon as possible if you want to begin experiencing savings. This is especially true if you have debt in high-interest categories from credit cards or even personal loans. Typically, you will be subjected to sky-high interest rates if you do not pay these off in time.
You want to come up with a practical plan when you are paying off this type of debt. The best way to do this is by prioritizing your debt in a way that allows you to pay off the debt with the highest interest at first or consider consolidating your debt with Loanza. That way, you will be able to continue to get rid of the debt that could spiral into more debt. From there, you want to avoid getting yourself into further debt using credit cards.
Get Rid of Your Expenses
Unfortunately, it can be exceedingly difficult to save money when you are dealing with a limited income. After all, you do not have much money coming in from the beginning.
While you should be implementing all of the money-saving ideas you already know about like cooking at home and even cancelling your TV subscriptions, other things can be done to help. For one, you should be looking to prioritize cutting your most significant expenses. By focusing your attention on your most significant expenses from the start, you will be able to make a much larger impact.
For many, the most significant expense is their housing. This tends to be one of the biggest portions of monthly expenses. If possible, you should look to downsizing if you are renting. If you already own your home, you might want to consider refinancing. Another good way to minimize these expenses would be to rent out your room to add some income to balance things out.
Note: Keep in mind, you need to fully understand the terms when refinancing. While you will typically be able to lower your monthly payment, it would usually come along with a longer loan term. Therefore, you will want to ensure that you are fully comfortable with extended the term length. Likewise, when you are doing this, you want to try to do some shopping comparisons. This way, you will be able to find the best deal when you are refinancing.
While you want to get rid of a lot of the bigger expenses you have, you should not forget about the smaller stuff. After all, the small stuff can add up. This is especially true if you are dealing with smaller reoccurring expenses like a cable bill, streaming services, or something else. That way, you can cut out a single expense per month that can add up over a year.
Always Leverage Free Money
You will want to take advantage of “free money” whenever possible. If you are a family that lives off a low income, you will likely qualify for the Earned Income Tax Credit (EITC). This is a refund that can come from your taxes which can help keep more money in your bank account. For some, it may reach as much as a couple of thousand dollars. Also, you want to keep an eye out on your retirement accounts. Try to figure out if your company offers ‘matching.’ Some companies will match up to a certain percentage of the contribution you make. If your company is one of them, you should leverage this as it is free money that can help you when it comes time to retire.
Keep a Lean Budget
If you are looking to save as much as possible, you will need to focus on spending less. You want to look at your budget and categorize everything. Figure out which categories you are looking to spend money in. That way, you can keep the rest of your budget nice and lean. While it may require you to make certain sacrifices, it is not impossible to accomplish.
Try to learn how to spend money in moderation. One of the best ways is to cut back on your dining out. While you can always go to a restaurant occasionally, try to avoid doing it too often that it eats into your savings potential.
Make Money on The Side
If you have already gone through a cut as many expenses as possible, it might be time to add a source of income. If you already have a full-time income, it may be time to start a side hustle. That way, you can get another income stream coming in.
A lot of the side hustles that you can start can be run from your home without any additional expenses. Likewise, they can be done before and/or after work hours. Therefore, you will be able to turn your free time into another form of income for your family.