People on retirement, students, or those who experience temporary financial difficulties often wonder how to save money fast on a low income. We often think about making a financial cushion when facing urgent money needs, but after we cover them, everything goes back to square one. It may seem it’s hard to set aside some money when you have a tight budget. Statistics show that an average American that is under 35 has nearly $3,200 in a savings account. And surprisingly, about 40% of Americans don’t even have money saved up to cover their unplanned $1,000 expenses.
But it’s never too late to create an emergency fund, even if you are in straitened circumstances. If you’re looking for some clever ways to save money fast, this article can help you reach your financial goals without too much effort.
Why Is Low Income Budgeting Important?
Experts believe that having savings from 3 to 9 months of your regular needs is vital to avoid financial stress and not get stuck in case of job loss or heavy unexpected expenses. When your financial situation storms, tt’s great to know that the balance of your savings account is sufficient to keep you afloat. This way, you get peace of mind and confidence in your tomorrow. In its turn, it contributes to your well-being, helps you avoid anxiety, and improves sleep quality.
Shania Brenson, the co-founder of 15M Finance, says: “Budgeting is essential for anyone who wants to make sure they have enough money to pay their bills and live happily. It’s especially important for people with low income, because the less you make, the more likely it is that something unexpected could arise and throw off your cash flow.”
Another reason for saving money is to provide a comfortable life in retirement. It’s the utmost desire of each person to reach financial stability and create a sufficient emergency fund before they become a senior citizen. Although elderly people now have many options for additional financing, such as loans for seniors or hardship loans, it’s not always reasonable to turn to any form of debt when you’re short on cash. To prevent obtaining debt in the future, young people strive to put down a pillow in advance in order to have a stable alternative to payday loans in case of future emergencies. In this way, tips on how to budget money can help you take a step towards a comfortable old age.
When you have extra money, you know you can deal with any financial emergency that gets in your way. Of course, there will always be some necessary expenses you can’t cut down. But there are some expenditures that can help you reach your goal of saving money fast just by reducing them. Let’s find out what simple steps can help you in budgeting on low income and saving much more money than you’ve expected.
15 Tips on Saving Money on a Low Income
If you have a low income, it’s not always possible to follow the tips of a financial advisor who recommends you find a source of passive income or set aside nearly 10% of what you earn. Here are some wise ways to save money that can be really useful for you.
1. Start to Budget Money
Having a financial plan is a great way to reach your savings goals in the shortest possible time. When you have a plan, it becomes easier to stick to it. Even if you have a tight budget, it should be under your control. Make a list of your current expenses, calculate your income and distribute your earnings among all expense items.
Use cash envelopes that can help you both categorize your spending and stick to a savings plan that is convenient for you. Feel free to start with a fixed considerable amount that you can save by canceling a subscription service. From this point, you start to move towards your savings goal, even if you set aside a few spare coins.
2. Keep the Funds in a Savings Account
Until your money is always as close as your wallet is, it won’t linger for a long time. A checking account is not the right place to keep your savings as it will always be a constant temptation to spend them. Consider opening a savings account to keep your nest egg separate from the funds you have in your bank account. Thus, it will help you save more money instead of spending it on food or everyday purchases. You can also automate your savings, so every time you get a direct deposit, part of your cash receipts will be transferred to your savings account.
3. Avoid Impulse Purchases
Spending money on unnecessary items may be your way to reward yourself, reduce stress, or treat yourself with love. However, it’s not very wise to spend money on things you don’t need and trap yourself in the end. You should take control of your spending habits before they start to control your life. Create a shop plan or try to do shopping online. Sometimes it can help you get a better price or even avoid unnecessary purchases. You can put an item in a cart and take time to think about whether you really need this thing.
4. Rethink Your Car Costs
Every car owner knows keeping a vehicle is costly. You need to make car payments and pay for car insurance, fuel, and maintenance. Therefore, you should appraise your financial situation before buying a car and ensure you can afford it. If you’re already a car owner, try to shop around for the most cost-effective routine maintenance and compare various car insurance plans. It can easily add some extra cash to your piggy bank. Also, you can reduce your transportation costs by using public transportation when it’s reasonable. It is also a great way to reduce fuel costs.
5. Plan Your Meals
Meal planning can save you a hundred dollars each month. When you make a food budget and stick to it, you can avoid high grocery bills and purchasing unnecessary foods. Also, stop using food delivery services and learn to cook your favorite meals instead. It can help you eat at home more often and save money on dining out. Another important tip you need to follow is to avoid going grocery shopping when you’re hungry.
6. Use Coupons
It may seem that using coupons can’t help you build wealth, but it all starts with simple and small. In fact, coupons can do you a favor by offering the item you need at a lower price. Apps like Rakuten or BeFrugal can help you save money or get the best cashback deals. But be rational and buy only the stuff you truly need.
7. Cut Your Heating and Cooling Expenses
Your electricity bill can make up the bulk of your housing costs but can also become a way to save money if you reduce these expenses. First, buy a standing fan instead of using AC in the summer. Also, you can use a smart thermostat that can save you about $180 per year. This device automatically sets the temperature in your house and allows you to save energy, which means saving money.
8. Give up Bad Habits
After you change your lifestyle, you can quickly find out how much money all your bad habits took. Try to stop smoking and drinking alcohol, or get rid of compulsive gambling and use this money to reach your savings goals instead.
9. Reduce Your Living Expenses
Sometimes living a bit below your means is the best way to improve your financial situation in the future. Consider reducing your rent or mortgage payments by choosing a smaller house. Also, you can consider refinancing your mortgage to save money if you manage to find a better interest rate.
10. Put Your Health in the First Place
Your health is the most precious thing that affects your quality of life. By choosing yourself, you also invest in your future and avoid high medical bills for diseases you can prevent. Do not postpone your annual doctor visits, and don’t forget about healthcare insurance too. Although insurance plans do not always cover all the medical expenses you may face, they can still help you reduce them significantly. If you don’t have a health insurance plan, your visits to a hospital or medical provider may cost you an arm and a leg.
11. Learn to Spend Less on Entertainment
When you want to save money on a low income, the first thing you need to do is to rethink the way you spend your spare time. Learn to choose free entertainment instead of spending money on it. Consider visiting a local library or free museums instead of paying for your Netflix subscription.
12. Consider DIY When It’s Possible
When you try to save money on a low income, repairs or home improvements may seem exorbitant. But you shouldn’t pay money for the things you can do on your own. Try to find DIY tutorials that can help you fix breaks without overburdening your budget. Just use YouTube or go to dedicated websites and learn how to do it yourself.
13. Pay Off The Debt
Defaulted personal loans, student debt, or credit card debt holds you back from financial freedom and building wealth in the future. Your debt snowballs fast and grows extensively, which reduces your chance of getting out of it. Set aside money each month to pay off your existing debt and try to cover debt at high interest first.
14. Use Cash instead of Credit or Debit Cards
Another great tip on saving money on a low income is to prefer cash to your credit or debit cards. When you use cash, you always know how much money remains in your wallet. It can hold you back from unnecessary spending or impulsive shopping.
15. Find a Bank With Lower Fees
Shop around or ask your friends about which bank they’re clients of and do a small research. Compare maintenance costs, ATM and overdraft fees, and interest on savings accounts, and switch to a bank that offers more benefits to you. It will help you avoid unnecessary banking fees.
Bottom Line – Is Budgeting on Low Income Possible?
Saving money contributes to your well-being and helps you reach financial stability. However, people who have a tight budget often wonder how to save money fast on a low income. The truth is that low-income budgeting is not as difficult as it may seem at first. Even when your revenue is below average, you can still save money by cutting down unnecessary fees and spending. Taking a few simple steps within just a few months can be a great contribution to your future financial stability.