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Once you start earning, it is crucial to keep some part of your income aside as savings. No matter how less you earn, it is significant to keep funds for emergencies or to meet your long-term financial goals, like buying a house.
We understand it is challenging to cut costs and save funds, especially when you are already struggling to make ends meet. However, the good news is that a strategic financial plan can actually help you sail through.
In this article, we will discuss the practical tips that can help you save money even with limited income and inch closer to achieving financial stability.
10 Tips to Save Money With Low-Income
Here are the tried and tested money-saving tips for those with low income. Use them to plan your finances, and money will never be a concern for you!
1. Set Realistic Goals
It is great if you have savings on your mind, but be mindful that it doesn’t affect your routine. You cannot cut the necessities, like gas and food.
So, it is important to set realistic and achievable goals. If you are new to savings, it is recommended to start by setting small goals and keep increasing the target as you feel comfortable.
Moreover, you can alter and set a higher saving goal if your income eventually increases over time.
2. Cut Down Unnecessary Expenses
You should start tracking your expenses and figure out where exactly you are spending your money. Check this list carefully to see the expenses you can cut off completely.
For example, you can start taking your morning coffee from home and not buy it from the store on your way to cut expenses!
There are many budgeting apps that can help you with budgeting, like YNAB; use them to track your expenses and be mindful of where you spend your money.
3. Lifestyle/ Behavioural Changes
Now that you have decided to make the best use of the money you earn, you have to make changes to your behavior or lifestyle.
Stop being an impulsive buyer and think twice if you really need the thing you plan to buy. Start planning house parties, or movie nights at home instead of spending on entertainment outside at clubs or movies.
When you visit a grocery store, stick to the list you carry from home and avoid getting allured by the offers. As per a report, 80% of shoppers spend $100 more than their budget on impulsive buying.
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4. Automate Your Savings
Opt for auto-cut saving methods, like direct deposit to savings accounts. So, when your salary is reflected in your account, your set amount immediately gets cut and transferred to your savings account.
Now, you can plan your budget according to the money left in your account! It is best for people who find it challenging to control their impulses to spend money.
5. Find Side Income Sources
Another way is to find a side hustle and multiply your income sources. The more you earn, the more you can save!
Simple ways to do so are by selling items you no longer use, turning your hobby into a side gig, or making sure you shop while taking advantage of cashback and reward programs on your debit card.
Moreover, if you have a unique skill, you can even start taking freelance projects and use the money to save for your future.
Related article: Passive Income Ideas
6. Use Assistance Programs
If your income is extremely low, know that the government has many assistance programs for you to help you meet your ends.
There is a food assistance program, SNAP, which you can use to reduce your grocery bills. Similarly, there is the Low Income Home Energy Assistance Program (LIHEP), which you can use to get a rebate on your home utility bills. Whatever you save from this can be put into your savings account!
7. Challenge Yourself
All this money saving can also be turned into a fun task by giving yourself and your family a small challenge.
A “no spend” challenge is when you keep a time frame, say 1 month, and challenge yourself to not spend anything within that period.
It will help reduce your impulsive shopping, and you can also save a significant amount of money inching closer to your financial goals.
8. Ditch Credit Cards
When you use a credit card, you actually do not get an idea about how much you are spending. It only hits you when it’s time to pay the bills!
So, to keep an eye on every penny you spend, it is better to only pay through cash or use your debit card where the transactions are happening in real-time!
This way, there are no surprises in the end; you used the money you had, and there are no bills to clear.
9. Invest in Family Insurance
In this whole scenario of spending mindfully and saving every bit you can, you cannot risk the well-being of your family.
So, before you start the process, make sure you invest in insurance and secure your family against any financial troubles.
You should go for health insurance, to compensate for any emergency medical situation. Furthermore, you should opt for life insurance or term life insurance to ensure your family is safe if anything happens to you.
10. Use Tax Benefits
There are multiple ways to use the tax benefits to increase your savings and achieve your financial goals. You can put money into the retirement savings.
Using this strategy, you are saving money for the time when you won’t have a steady income, and tax benefits for the current period will also help you save.
You should check the tax benefits slab of your province to use this as a strategy to save money on a low income.
Conclusion
The key to saving money when you earn less is to prioritize your financial goals, track your expenses, and create a strict budget that supports your saving potential.
You should start by cutting unnecessary expenses, like dining out or entertainment, and use government assistance programs to reduce your housing costs and utility bills.
The top 10 tried and tested strategies that we listed above are ideal for building a strategy approach towards savings.
Understand that when it comes to saving, every penny counts. Small steps will lead to big results, helping you build financial security and achieve your goals, no matter your income level.
