Most of us want to save money so that we can have savings and plan for the future. We have goals we want to achieve (like travel) or things we want to buy (like a dream home). However, this can seem impossible when you are surviving on a low income.
According to CNNIn the U.S., 25 million households live paycheck to paycheck. When money is tight, saving any amount of money may be the last priority on your list. You're just trying to get by.
So how do you save more money when you're making minimum wage? How do you achieve your financial goals on a low income?
When it comes to finances, it's important to think not only about the present but also about the future. Even if you're earning minimum wage, you can still save a little bit at a time. Here's how:
1. Tackle high-interest debt first
To start saving more, you need to tackle your debt head on. Specifically, the high interest rate on personal loans, or credit cards, as they require you to pay outrageous fees and interest.
When you pay off a debt, you need a repayment plan achievable, but challenging. Start by prioritizing your debts to pay off the ones with the highest interest first.
Then, as you go along, avoid accumulating other high-interest debt, especially credit cards.
2. Reduce your biggest expenses
Trying to save money when you have a low income can be very difficult. Sometimes it seems impossible to cut even a dollar or two each month.
Apart from the common money saving ideasWhat else can you do, like cooking meals at home and canceling your cable bill? Instead of trying to cut back on your small expenses, focus on the biggest ones to have a more significant impact.
For most people, housing costs tend to be the largest part of their expenses. If you are renting, consider downsizing or living with roommates.
If you own your home, look into refinancing your mortgage for a lower rate would be beneficial. You can also rent out a room or a parking space for extra income. namely
3. Take advantage of free money
Take advantage of "free money" when you can. As a low-income family, you can take advantage of the Earned Income Tax Credit (EITC). According to the IRS website, the EITC can be a significant refund on your taxes, allowing you to keep more of what you've earned. Sometimes even up to a few thousand dollars.
You should also look into a 401K at work and see if your company matches up to a certain percentage of your contribution.
If so, you should take advantage of it and start saving as much as you can. The company match is essentially free money to help you save for retirement.
4. Keep your budget lean
To save more, you need to take control of your spending. Choose the categories in which you want to indulge, and keep the rest of your budget as lean as possible. You will have to make sacrifices, but it's not impossible.
It is enough tolearn to spend in moderation. For example; reduce the frequency of your restaurant outings. You can still enjoy a good meal out, but not several times a week.
5. Start a Side Hustle
If you can't cut costs any more than you already have, consider diversify your income in starting a side hustle to earn extra money. Outside of your full-time job, you can get a job on the side to provide another source of income.
Many secondary activities can be done directly from your home during your free time. Think about what you are good at, what kind of hobby can make money, or what you already enjoy that can be turned into a side job.
Popular side hustles include freelance writing, data entry and graphic design.
Saving money when you earns minimum wage is difficult but possible. It is important to understand what your priorities are and create a values-based spending and saving plan.
Once you do, you will be more intelligent and wiser with how you spend money and ultimately you will be able to save more.
If you want to live within your means, you have to be mindful of your income and expenses. Otherwise, it's impossible to break the cycle of living paycheck to paycheck.