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|7 Practical Hacks To Save Money On A Low Income by nairaab: 2:07pm On Nov 30, 2021|
7 practical ways to save money on a low income: https://anthonyex.com/7-practical-hacks-to-save-money-on-a-low-income-how-to-save-money-fast-on-a-low-income/
Do you feel like it’s nearly impossible to save money based on your current income?
While saving money is much easier when you’re making big bucks, it is entirely possible to save money on a low income; therefore in this guide, I will share with you 7 practical ways to save money on a low income and if you’re new to the blog; subscribe
Number 1: Lower Your Housing Costs
Whether you rent or you own, the cost of your housing will be your largest expense every month. Many financial experts suggest that the total of your rent or mortgage payments plus bills should be no more than 35 percent of your monthly after-tax income and while this expense eats up a lot of your monthly income, it also offers the largest opportunity to find cost reductions essentially allowing you to save more money even if you’re earning a lower income
For renters, you can find a cheaper place perhaps a single room in someone’s house to be adequate for your needs instead of continuing to rent a 2-bedroom apartment but if you have no desire to move then it may be time to look into other ways to reduce your current rent
Effective strategies can include negotiating an exchange of your services like doing renovations for a rent reduction or agreeing to sign a longer lease if the tenant security is what your landlord wants.
For homeowners, the advice is a little bit different; small things like turning off the lights and reducing your water usage can lead to substantial savings over time; however, the best way to offset your housing costs is to rent out a room in your home which can easily net you a few extra hundred dollars a month to help cover your bills allowing you to put more money in your piggy bank at month’s end
Number 2: Avoid Debt
If you want to save money while making an income smaller than you’d like, then you must avoid debt at all costs. This is because debt deters you from saving in two ways; firstly, having that means monthly repayments and secondly, debt is almost always associated with monthly interest charges. Avoid loans
The interests accruing on loans could do much more if out into a savings account
Number 3: Limit Entertainment Costs
We all want to have fun but unfortunately for many people, this comes at a hefty cost. Eating out, hitting the bar after work, going to the movie theater and other entertainment purchases can make a huge dent in your budget but luckily doesn’t have to.
When I was younger my main source of fun was going out to the club with my friends but unfortunately, most nights were very expensive, as I got older my attention shifted towards growing my wealth and I didn’t want to lose out on social time with my friends this made me brainstorm new ways to get in quality time with my friends while not breaking the bank.
One of my favorite alternatives has been going on walks with my friends but some other ideas I’ve come up with include having dinner parties at home rather than at a restaurant and watching a movie on Netflix rather than going to the theater
In short, we all need to have fun but we don’t have to spend an arm and a leg to do it
Number 4: Understand Your Wants versus Your Needs:
There’s no doubt that spending money makes us feel good but when you’re earning a low income and have a desire to save, you need to be able to separate your wants from your needs; for instance, you may want to upgrade your phone to the newest model but you probably don’t need to, you may want a new shirt to wear out this Friday but you probably already own plenty of good shirts.
When you’re not making a lot of money you have to be extra diligent and spend only on your core expenses.
So how should you draw the line between want and need?
Anything that relates to my survival is my needs; these are things like food, clothes, shelter, and transportation in their most basic form; sure buying a Ferrari is transportation but in its most basic form, taking the bus also gets you from point A to point B
Anything that falls outside your needs’ group is an extension of things you already own; for example, if you were to upgrade your phone to the new model just to get a camera with an extra 2 megapixels in it
Now, of course, you can’t restrict your spending to the bare minimum forever so if you do want to splurge on an item, here’s what I suggest: set a financial goal you want to achieve like saving $1,000 once you’ve hit the goal, you can then go ahead and purchase the item you’ve been wanting.
This technique is great for 2 reasons; first, it helps you build the habit of forming financial goals, and second, it gives you time to process how badly you want the item as often, we purchase things out of impulse. So, if you want to ensure you save money on a low income you must be able to delineate your wants from your needs
Number 5: Spend Wisely on Groceries / Foodstuffs
This is one of the highest monthly expenses we typically incur, however with a bit of planning and the strategies I’m about to share with you, it’s not unreasonable to be able to cut that in half
The first step in cutting your monthly grocery bill is to plan your meals ahead of time; this will not only be a step in the right direction from a health perspective but it will also ensure that you only eat when you absolutely need to. Whether you realize it or not, we waste a lot of food. Besides avoiding waste, planning ahead will allow you to buy foods that are on sale meaning that your typical $250 a week grocery bill can easily shrink to $200 or less ultimately putting more money in your pocket at month’s end
The second step in reducing your grocery costs is to eat less meat. Meat is by far the most expensive grocery item you can buy which makes it an easy target when trying to reduce your bill. Now I’m not saying you need to become a vegetarian in order to save money but by cutting down your meat consumption or replacing it with cheaper options, you will be able to cut down your grocery bill drastically
The final tip that will help you reduce your food bills is to only bring cash when going grocery shopping. All too often, people find themselves at the grocery store hungry and eager to fill up their shopping carts which are facilitated by the seemingly endless ability to spend on credit; instead, plan out your purchases ahead of time and only bring enough cash for those items you need so you don’t let your hunger get the best of you
Number 6: Practice Zero-Sum Budgeting
When practicing zero-sum budgeting, you are intentionally spending every single Dollar/Naira you make but not in the way it sounds. Zero-sum budgeting involves allocating your income towards each of your expense line items and in your marking, any leftover funds towards the savings or investment account.
Let’s use an example to illustrate this budgeting method; Say you were earning $2,000 a month after tax at your job; using the zero-sum budgeting method, you would allocate this entire $2,000 towards your monthly expense line items; typical expenses include rent, car, payments, gas, groceries, and entertainment but using this method you would also create a line item for savings
The strategy is particularly effective for those who typically get to the end of the month and realize they have no money left for savings but with the zero-sum budgeting method, as long as you stick to your initial budget you will be sure to see your bank balance grow
Number 7: Automate Your Savings
The final step in ensuring you save money even on a low income is to automate your savings. One of the best things I have ever done for my finances was setting up automated deductions from my pay with my employer; in essence, what these deductions allowed me to do was send part of my paycheck directly into a savings account instead of the full amount going right into my checking account.
When I initially set up this process I allocated 10% of my after-tax income to my savings account but over time I found that I’ve been able to up this to about 20% and double my monthly savings. Now I think this savings technique has been so successful for two primary reasons; first, it allowed me to pinpoint exactly how much I wanted to save, in fact by using automated deductions you can set your deduction to the amount you have designated as monthly savings in your zero sum budget which helps you tie the two money saving techniques together. Second, it took the thought of having to save off my mind allowing me to focus on other important things like improving my skills in order to make more money
I often preach that once you have a solid savings technique in place, that making more money is the number one way to save more and by freeing up a mental bandwidth I was able to take on more freelance work; earning the extra income and ultimately boosting my savings
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