7 Money HACKS to Save FAST on a Low Income
Obviously saving money when you’re in a high paying job is pretty easy. But what can you do to save funds for the future if you’re barely making enough to make ends meet? Is it a lost cause to be able to retire early, or even have enough set aside by the time you DO need to retire?
Well, I’m Kim, and in today’s Article I’m going to share seven practical hacks that will help you save money even with a low income. Some of these might seem obvious at first glance, but there are hidden methods to each that can really help you save some dough. If you’re struggling to set money aside then this is the Article for you! Are you ready? Let’s go!
Lower your housing expenses
Hack number one to Save FAST on a Low Income is to lower your housing expenses. As you probably know, housing costs will be your biggest monthly expense whether you own your home or rent. Many experts say that your rent or mortgage payment plus your bills shouldn’t be more than 35 percent of your monthly income after taxes.
This expense takes up a lot of your monthly income, but it also gives you the best chance to find ways to save money. This means you can save more money even if you’re renting and making less money. There are many ways to cut down on housing costs, the first of which is to find a cheaper place to live.
Yeah, I know. That seems obvious. But often times we think we need more room than we really do. Instead of renting a two-bedroom apartment, you might be able to get by with just one room in someone’s house. But even if you don’t want to move, you might want to look into other ways to lower your rent.
Effective strategies include negotiating a trade of services, like doing renovations in exchange for a lower rent, or agreeing to sign a longer lease if the landlord wants to make sure the tenant is safe. One time I exchanged services to help with the landlord’s business in exchange for 50% reduction on the rent.
This simple swap of goods and services saved me thousands of dollars over the course of my lease, which helped me save money even though I had a low income. Of course, be sure you lay out the parameters of the exchange in writing so that neither of you are taken advantage of. If you own your own home, the advice will be a little different. Moving probably wouldn’t help you save money.
But even small things like turning off the lights and using less water can save you a lot of money in the long run. Renting out a room is probably the best way to help you out. You can easily make a few hundred dollars more a month by renting out a room in your house. This can help pay your bills and give you more money at the end of the month to put in your piggy bank.
Hack number two to Save FAST on a Low Income is to avoid debt. If you don’t make as much money as you’d like but still want to save money, you must avoid debt at all costs. This is because debt makes it hard to save in two different ways. First, if you have debt, you have to pay it back every month.
Creditors will come to your door every month to ask for money. If you could avoid getting into debt, you would have more money at the end of the month. Second, you almost always have to pay interest on debt every month.
Rates for lines of credit are usually around 3%, which means that if you have a $10,000 balance, you will pay between $25 and $40 a month in interest. Even though this doesn’t seem like much money, if you do this every month, it can start to add up.
When you add up all of your payments and the interest you have to pay on them, you can start to see how having debt can make it hard to save on a low income. When it comes to credit card debt, this problem gets even worse.
If you have the average credit card balance for an adult in the US, which is $6,348, you’re paying credit card companies about $1,120.42 in interest. Just imagine what you could do with an extra $1,100! So, if you have a low income and want to save money, you should avoid debt and the interest charges that come with it at all costs.
Limit entertainment costs
Hack number three to Save FAST on a Low Income is to limit entertainment costs. Unfortunately, having fun often comes at a steep price for many individuals. Going out to eat, going to a bar after work, going to the movies, and doing other fun things can really hurt your budget.
But it’s a good thing it doesn’t have to. One of my favorite alternatives is going for walks with my friends. You can also have dinner parties at home instead of at a restaurant and watching movies on Netflix instead of going to the theatre. In short, we all need to have fun, but we don’t need to spend a lot of money to do it.
Understanding your needs versus your wants
Hack number four to Save FAST on a Low Income is understanding your needs versus your wants. We feel good when we spend money, there’s no doubt about that. It’s been scientifically proven that the process of purchasing things creates a dopamine effect.
But if you have a low income and want to save, you need to be able to tell the difference between what you NEED and what you WANT. For example, you might WANT to buy the newest mobile phone model, but you probably don’t NEED to. You might WANT a new shirt to wear out on Friday, but you probably already have a lot of good ones.
When you don’t make much money, you have to be extra careful and only spend on the things you need. So how do you decide what you need and what you just want? I like to call a “need” anything that helps me stay alive. These are the most basic forms of things like food, clothes, a place to live, and a way to get around.
Wants are pretty much anything else. This includes anything that goes with what you already have. For example, if you bought a new phone just to get a camera with two more megapixels, that would be a waste of money. If you DO decide to spend money on something that is a “want”, then I suggest setting a financial goal for that purchase.
Once you’ve reached your goal, you can buy the thing you’ve been wanting. There are two great things about this method. First, it helps you get into the habit of setting goals for your money. Second, it gives you time to think about how much you want the thing.
As often as not, we buy things on a whim and soon after have to return them or buy more. So, if you want to save money on a low income, you need to be able to tell the difference between what you WANT and what you NEED.
Spend wisely on your groceries
Hack number five to Save FAST on a Low Income is to spend wisely on your groceries. $1,000 is the typical amount spent on food each month by a family of four. Aside from lodging, this is one of the most expensive things we have to pay for every month.
However, it is not impossible to cut that number in half with some forethought and the advice I am about to give you. Planning your meals ahead of time is the first step to lowering your monthly grocery bill.
This will also be a step in the right direction for your health. Plus it makes sure you only buy what you really need. In general, we tend to throw away a lot of food, whether we know it or not. If this waste could be stopped, it could save a lot of money at the grocery store.
Planning ahead will help you avoid wasting food and buy foods that are on sale. This means that your typical $250-a-week grocery bill can easily drop to $150 or less, giving you more money at the end of the month. The second thing you can do to save money on food is to eat less meat.
Meat is by far the most expensive thing you can buy at the store, so it’s easy to cut back on it if you want to save money. Now, I’m not saying that you have to become a vegetarian to save money, but if you eat less meat and replace it with cheaper foods like beans or eggs, you’ll be able to cut your grocery bill by a lot.
Two more things you can do to save money on food is to go grocery shopping with only cash, and only when you aren’t hungry. People frequently visit the supermarket in an attempt to satisfy their hunger pangs while they are there.
And because of the ease with which people can make purchases on credit, this compounds the spending problem. Instead, make a list of what you need and only bring enough money to buy those things. This way, your hunger and available credit won’t get the best of you.
Using the Zero Sum Budgeting method
Hack number six to Save FAST on a Low Income is using the Zero Sum Budgeting method. When you use the zero-sum budgeting method, you spend every dollar you make on purpose by putting all of your income toward each of your expenses and then put any extra money into a savings or investment account.
For example, after taxes, your job pays you $3,000 a month. With the zero-sum budgeting method, you would spend all $3,000 on your monthly bills and expense categories. But you also have a category specifically for savings and investments.
Typical costs are rent, car payments, gas, groceries, entertainment, and so on. But with this method, you would also make a part of the budget for savings. Once this list is done, you might spend $2,000 on the budget items and the remaining $1,000 goes directly into your savings accounts so you end up with zero at the end of the month.
This plan works well for people who usually reach the end of the month and realize they have no money left to save. But if you use the zero-sum budgeting method, your bank account will grow as long as you stick to your initial budget.
Automate your savings
And lastly, hack number seven to Save FAST on a Low Income is to automate your savings. The last thing you can do to make sure you save money, even if you have a low income, is to set up automatic savings. Setting up automatic deductions and distributions from your paycheck with your employer is one of the best things you can do for your financial future.
Basically, these deductions let you put part of your paycheck straight into a savings account instead of having the whole amount go into your checking account. This method of saving works well for two main reasons.
First, it helps you figure out how much money to save. In fact, if you use automatic deductions, you can set the amount to be the same as the amount you set aside each month for savings in your zero-sum budget.
This helps you combine the two methods of saving money. Second, you don’t have to think about having to save, so you can focus on other important things, like getting better at what you do to make more money.
ll these 7 hacks to save money – even on a low income – relates to idea of living a frugal life. And once you have a solid savings technique in effect, then making more money is the number one way to save more. By freeing up yourself from a mental stress on how you can save, you are now able to take on more side hustles to earning extra income which will ultimately boost your savings.