With the majority of the population within the U.S. living paycheck-to-paycheck, many households are struggling to save money. When it comes to families surviving on low incomes, the problem is even direr.
In this article, you will discover that even on a low income, you can save money. It won't be easy, but here are several ways you can start saving more money.
Saving money can prove challenging, especially when living paycheck-to-paycheck. By making a plan, budgeting, reigning in expenses, and consistently saving small portions, you will reap significant benefits.
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1. Set a Savings Goal
If you are looking to start saving money, you need to get serious about it. One of the best ways to begin is by setting a goal. Jot down what your goal is. Whether it is saving for an emergency fund, a down payment on a car, rental property, write it down.
Writing down your goals will serve as a reminder of what you are striving for and will reflect your ambitions. It also serves as a reminder of what is important to you. A Chinese proverb says, "Do not wait until you are thirsty to dig a well."
Setting a goal is your first action if you want to see the results.
2. Break Your Spending Habits
Most households struggle to save money. Whether a home is bringing in five to six figures a year up to millions, I've witnessed numerous families finding difficulties to save money every month.
The inability to save money every month generally stems from poor money management (budgeting and spending). Ask yourself when was the last time you had an overdraft fee charged to your bank account. Are you always browsing on retail websites looking for deals and buying "stuff"? Do you price compare when buying groceries?
The first step to take in breaking your spending habit is to stop spending more than you earn. This means no more credit card use, buying items on impulse, stop going out to eat at restaurants, etc.
Overspending is always an issue, but fortunately, it is an issue that can be stopped with some practice.
3. Analyze Your Spending
This leads us to the next step: Review Your Spending Habits.
Take out a piece of paper and open up your checking account or credit card activity. Jot down every purchase you have made for this month and the prior month. Before this activity, you might be thinking you are relatively frugal, but after jotting down every item you have purchased, you will quickly realize there is room to cut back.
Recognizing where your money is going for the last several weeks, it is time to break some bad habits. If you find yourself clicking on social media ads or buying items on Amazon or QVC, then turn those off. By not inviting the devil in to tempt you with deals, sales, and marketing schemes, you can reduce the odds of spending your money.
Marketers are highly proficient enticing consumers to click on their webpage because they have learned and discovered that if you click on their website, it increases the chances of you purchasing. Avoid temptations. This may even require you to unsubscribing from emails.
4. Stop Using Credit Cards
Easy access to credit is everywhere nowadays. With businesses promoting easy payments from AfterPay to Affirm monthly payments, they prey on this sales tactic that you can have it all now and make payments later. While the interest may be low, you are creating additional monthly payments for yourself. These are payments that could be paying your bank account, not to someone else.
Does this mean that rewards are bad? No, but if you are struggling to save money, you have to change your mindset. Start enforcing into your head that it is time to pay yourself, not others. Credit cards are easy and simple to use, but it forces you to make payments later.
5. Reign in Your Expenses
Saving money can be difficult. It boils down to one of two things on why many households can't save money: Expenses are more than their income, or they are spending more than what is earned. The two are not the same.
For instance, when your expenses are more than your income, this is the most challenging position to be in when trying to save money. Every dollar is going towards rent, food, utilities, gas or bus fees, and essential survival items.
When consumers spend more than they earn, it is because they are not following a spending plan and not budgeting their money. It is easier to resolve poor spending habits because once the mindset can be changed, it is a matter of redirecting the funds to go where it needs to go and start working for that person.
If you are the first example, first cut out unnecessary spending for the next few months (entertainment expenses, magazine subscriptions, lottery tickets, fast food trips). Every dollar counts here.
Next, list out every bill for the month from highest to lowest balance. Determine if any of these expenses can be removed, not impacting the basic quality of living. You must maintain costs for electricity, gas, food, and water, but check to see if your utility company offers Energy Assistance Programs.
Some cities offer relief programs for elderly, disabled, qualified military veterans, and low-income households. It is always worth a phone call, and even saving a few dollars will help you towards your savings goal.
Next, food is a significant expense for most households. It is estimated that families spend an average of $650 - $1,200 per month on food, depending on the home's income.
There are a few terrific ways to save money on food from coupon clipping to meal prepping. A great resource on prepping affordable meals is $5 Meal Plan, which offers a printable weekly meal plan service. Each meal is customized to cost about $2 per person if not less, in most instances. You can try it for 14 Days Free to see if it helps your family finances.
Other strategies for saving money on food are buying generic goods and items on sale.
6. Earn Extra Income
If you still find yourself struggling to save money, then it is time to increase your income. Start searching for ways to earn income on the side. If you are already working a full-time job, this can be difficult.
Fortunately, the internet has created vast opportunities for income earning potential. In our article, 15 Ways to Earn Extra Income, we break down the most legit ways to "no kidding" make money. I've tried each of these to prove it does work personally. While you won't get rich by doing it, these jobs can help you during a money-crunch period.
The only job in the 15 Ways to Earn Extra Income article that was highly difficult for me was online surveys. My availability of when the surveys became available proved to be complicated.
7. Start Saving No Matter What
There are always reasons not to start saving money. The earlier you can make it a habit, the easier it gets over time. Right away, decide how much to start saving. While you may be able to save only $10 after your first paycheck, start with $10.
When you receive your next paycheck, increase by $5, and already you will have $25 in two weeks or more than $50 by the month-end. If you decide not to raise it with every pay period, $50 a month will add up to $600 in a year.
How impactful is having $600? For many low-income homes, it can be huge. Remember, Rome wasn't built in a day. You have to start building by laying one brick at a time.
8. Sell Unused Items in Your Home
Stuff is stuff. I have a rule that if it hasn't been touched in a year and is not something sentimental or being passed down from a family member, I get rid of it.
There is big money to be made by selling goods on Facebook Marketplace or eBay. From appliances to home decor, you can quickly render a few hundred dollars. The money made by selling those items can be put towards an emergency fund or your savings goal.
9. Improve Your Household Budget
Every home needs a financial plan, and it starts with budgeting. While you are rolling your eyes when you read this last one, a budget is your roadmap that tells your money where to go, but most importantly, it acts as a restraint from overspending.
If it isn't in the budget, you don't buy it. There are several free docs online for budgeting. I have built a customized budget for every home's possible outcome and sell it for under $5. You can find several for under a dollar that covers the listing fee and the staff-hours in creating. Shop Budget Templates at my Etsy Store and let me know how it helped your financial situation.